What to Look for in a Savings Account
There are so many savings account bells and whistles! At the core, here are the five things you need to consider when looking at a savings account:
- Interest Income
Let’s tackle these issues one by one here!
Stability: Look for FDIC Insurance
The first thing to look for in a savings account is FDIC protection. This ensures that your money will be available to you, even if your bank fails. If you choose a credit union, look for National Credit Union Administration insurance, which is similar to the insurance offered by the FDIC.
Fees: How Low Can You Go?
These days, there are so many fee-free options available that you really shouldn’t be paying for a savings account at all. But, if you do choose one with conditional fees, find out if you meet the requirements necessary for getting those fees waived. Even fees as small as a few bucks a month will wear away at your savings, month after month, time after time.
Accessibility: Get Your Money When You Need It!
Sure, you might find a bank that offers outstanding interest and no fees. But if it takes a week to transfer money from that bank to your checking account, it’s not a good place to store your emergency fund! Generally speaking, the more likely you are to need the money at a moment’s notice, the easier it should be to access your money. You may not want to have all your savings linked to your checking account, as that can cause unnecessary temptation to overspend.
The bottom line here is that you might need different levels of accessibility for different accounts. Maybe half your emergency fund is at a bank in town so that you can withdraw cash without ATM fees whenever you need it for example, while storing the rest of it at an online bank with a good interest rate. It’ll take a couple of days to get your money, but not usually more than that. And then you can store savings for particular things like your next car somewhere that you can access the money within three to five days.
Interest Income: Higher Isn’t Always Better!
Remember, this type of savings account is not for investing. And in today’s environment, you shouldn’t expect to find an account with stellar interest rates. The differences between banks are pretty small too, so you shouldn’t choose based on this factor alone. With that said, earning a bit of interest can offset some of what you’d otherwise lose to inflation. So do look at interest rates, especially when choosing a bank for longer-term, higher-balance savings that will earn more over time. But, of course, be sure to balance any increases in interest against potential increases in fees, which can quickly erode that extra interest income.
Customer Service and Tools: Look at Reviews
When evaluating customer service, there are two important factors to consider. The best banks offer all account maintenance and transfers through a professional, reliable, and easy-to-navigate website. Secondly, live customer service representatives should be knowledgeable, helpful, and available.
Good customer service is essential for a bank. If you have trouble logging in online and need your money, you need to be able to get someone on the phone to fix the problem. Check around for customer service reviews for the banks you’re considering. Then, be sure to take a look at additional tools that you might find helpful. These days many banks have apps for managing your money, take check deposits from your phone, or have financial advice available for free. These aren’t make-or-break features for most customers, but can be the icing on the cake!
Once you’ve gotten through all of these steps, you should be able to find a savings account–or two or three!–that meets your particular needs.