3 reasons to love savings accounts
On the surface, a savings account is a place to store your money at a bank. But it can be far more than just a place to keep your cash. Used as part of an comprehensive financial plan, savings accounts can provide:
- A feeling of financial stability from knowing your principal is safe and the interest income is reliable
- An effective way of tracking and accomplishing your savings goals
- A tool to help you cover unexpected expenses or self-insure purchases
But unlike the old days when you'd simply visit your nearest bank to open a savings account, there are lots of decisions to be made today. From Internet banking options to different savings account types, there's a lot to learn. But you can get the details here.
Are all savings accounts created equal? >>
Comparing savings accounts: Not all are created equal
Most savings accounts share some common features, but the terms among these accounts are rarely identical. Fees, minimum balances and interest rates can vary widely.
Before you compare savings accounts, make a list of features that suit your banking behaviors. Do you want an account that won't charge fees without a direct deposit? Do you want an account that can be linked to your checking account to avoid overdraft fees? Do you want the ability to set up sub-accounts for specific savings goals?
Remember also that traditional savings accounts are just one option. You might also consider money market accounts and certificates of deposit (CDs), which may offer higher interest rates. But these types of accounts may come with stricter limitations too.
What's the best way to choose a savings account? >>
What's the best way to choose a savings account?
When selecting a savings account, keep in mind the features that are most important to you. For instance, you may decide that you will select a savings account based on:
- Its interest rates
- Its online banking features
- Its fees (or lack thereof)
- The bank's reputation
If the most important feature to you is that your new savings account offers a high interest rate, a great way to narrow the field is to compare savings rates online to find the highest rates available.
Are online savings accounts better? >>
Are online savings accounts better?
Online savings accounts are an increasingly popular option with consumers. Here are a few things to note about them:
- Fees. The costs to operate an online bank are typically much lower than those of traditional banks, which may translate to lower fees at online banks.
- Savings interest rates. For the same reason, you can often find better interest rates with online banks.
- Transferring money. When you use an online savings account, it can take a day or two to transfer funds to other accounts. While this can be inconvenient, it may also help to prevent impulse spending.
To determine whether an online account may be right for you, learn more about the pros and cons of online savings accounts.
How does FDIC insurance protect savings accounts? >>
How does FDIC insurance protect savings accounts?
When choosing a bank for your savings account, you will want to check whether that bank has FDIC insurance. This is insurance offered to banks by the federal government in order to protect the money that you put into your savings.
The FDIC guarantees that your money (up to at least $250,000 per depositor at each banking institution) will be protected if the bank goes out of business. This protection is particularly valuable in poor economic times, when the last thing you want to worry about is losing your savings because your bank went belly-up. While individual banks do fail, FDIC insurance has not failed to cover a single bank customer since its inception in 1934.
With thousands of FDIC-insured banks to choose from, there's virtually no reason not to take the safe-and-secure route.
What's my next step? >>
I want to open a savings account: What's next?
Whether you're new to shopping for savings accounts online or an experienced rate chaser, you'll want to make sure the best interest rates on savings accounts are not leaving you in the dust. If you take a few minutes to compare savings rates from time to time, you'll sleep soundly knowing your deposits are safe -- and earning you a competitive yield.
SavingsAccounts.com aims to help you find an online savings account that fits your needs. This site is designed to help you compare high-yield online accounts to find the interest rate and features you want. The sooner you start saving, the sooner you can reach your savings goals, so review the tables below to see what top banks are offering today.
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