Picking The Right Type Of Savings Account
The elements that require consideration when establishing a bank account are a little different than a checking account, this is because you will use a savings account differently. With your savings account, money is expected to be deposited more than withdrawn, there are usually specific goals in mind for the savings amounts, and the account holder expects a decent interest rate to apply to their money to help the savings grow - effectively, your money should be working for you as it sits in the account.
But, what factors do you need to consider when choosing your savings account? How can you be sure that the savings account you sign up for is the right one to support your financial goals? Let’s take a look below at some tips for picking the right type of savings account.
Go With the Most Secure Institution
When it comes to your money, there’s nothing more important than knowing it’s secure, protected, and insured. While there are certain mandates that banks have to follow in order to protect and insure your money, some are more safe than others. Be sure to ask the bank you’re considering what safety measures they have in place, especially pertaining to online safety. In regards to online account information storage and transactions, ask them about the following to be sure they have adequate protection:
- If they have malware and antivirus in place
- If they have SSL and firewalls implemented on their site
- If cookies are stored to help recognize your login
- If you are automatically logged out
Regarding your money’s insurance, most banks will be FDIC insured to protect your investments, however, it will only cover up to $250,000. If the amount of money is expected to exceed that number, you’ll need to ask how it is protected with larger amounts.
Choose the Highest Interest Rate
Perhaps one of the most important things about the savings account you choose is how much it will earn in interest - you want your money to continue to grow while it sits. Often online banking institutions will have the highest interest rates available, so if your current bank isn’t offering a high APY (annual percentage yield) check with one of the online banks like Ally.
Pay Attention to How Often Interest is Compounded
If you’ve found several banking institutions with competing for APY’s, one thing that may set them apart is how often that interest compounds (how often the interest is paid to your account). Some banks will only compound annually, which means that additional money is inaccessible to you and may hinder some of your savings goals.
Minimums Matter
Don’t feel pressured to accept a savings account at a bank that will lower your APR or reduce your interest just for not maintaining a certain minimum or making a certain number of deposits. There are plenty of banks these days that have no minimum requirements.
Don’t Get Caught By Surprise Fees
There’s nothing worse than to save regularly, expect to see your money grow with the APY and your diligence, then be hit with a bank statement that shows your APY has been counterbalanced by monthly maintenance fees charged to your account. Many banks these days have done away with the maintenance fees, so you should be able to locate one that won’t charge you to keep your money. Also, be on the lookout for fees for withdrawing over a certain number of times, depositing over a certain number of times, or not hitting a certain minimum dollar amount.
Be Able to Bank on the Go
Your busy and your bank should be able to keep up. Be sure to choose a bank where you can save on the go, make transfers wherever you are, and view your balance.