Where you keep your money matters, especially when it comes to the savings you work so hard to stash away.
Finding the best savings account that meets your needs can seem like a simple decision, but it’s a much more calculated choice than you’d think.
In other words, don’t just settle for whatever savings account your primary bank or credit union offers. It’s important to take these key factors into consideration.
What’s Ahead:
1. Competitive interest rate
Interest is one of the most important benefits of having a savings account, so make sure you’ll be receiving a competitive interest rate. It’s what makes storing your money with a bank better than stuffing it under your mattress.
You want your money to work for you and earn interest as opposed to sitting in an account and collecting nothing but dust.
Unfortunately, most savings accounts offered by big banks have extremely low interest rates like .01 percent APY, for example. At that rate, your money will earn just pennies per year in interest.
The savings accounts that have the most competitive interest rates are often with online banks. Online banks are flexible, secure, easy to use, and offer many benefits of brick and mortar banks.
Since these banks don’t have to pay for physical branches and related expenses, they can offer their customers better incentives.
For example, PrizePool offers 0.30% APY (that’s over 7.5x the national average). Plus, to add a little fun to the savings game, you’ll be entered to win one of almost 6,000 cash prizes every week. That also includes a $10,000 grand prize at the end of the month.
Read more: Compare more of today’s best online savings accounts
2. No fees
Many of us don’t like paying bank fees and for good reason, so don’t settle for a savings account with high and irrelevant fees. Fees eat up your hard-earned money and should be avoided if you truly wish to build a solid savings account. Some accounts will charge a monthly service fee if you don’t maintain their minimum balance requirement, a fee for inactivity, or a fee for excessive withdrawals.
The good news is that most bank fees can be avoided and you just have to read the fine print and be mindful of your banking activity. For example, check to see what your bank’s monthly withdrawal fee is for a savings account and make sure you don’t exceed it.
You also need to be honest about how much money you can keep in your account at all times, or else you run the risk of getting charged a fee for not maintaining the minimum balance.
If you’re saving for a short-term goal like a vacation, a bi-annual insurance payment, or even a down payment on a new car, make sure your savings account won’t be completely drained when you have to pull money out to pay for that purchase.
3. Ability to make automatic transfers
Pretty much any bank you choose should allow you to set up automatic transfers, which will be key for your savings strategy. If you want to contribute to your savings account without even thinking about it, your best bet is to set up automatic transfers.
Life is unexpected, so your expenses will be as well. This is why it’s best to have a fixed amount transferred from your checking to savings account automatically to build up your balance. You want to make sure you can do this easily even if your checking account and savings accounts are with different banks.
Also, pay attention to the estimated time frame it takes to actually complete the transfer. For example, if you’re transferring money to or from an external account, it could take three to five business days to show up and be available for use.
4. Liquidity
Keeping money in a savings account is quite different from investing. You don’t want all your funds to be tied up should you need them for an emergency. Make sure you’re able to access the money in your savings account in a reasonable amount of time via online transfer, ATM withdrawal, or by making an in-person withdrawal at the bank.
Be mindful that federal regulations limit savings withdrawals to a maximum of six per month. If you’re looking to make painless withdrawals from your savings account, choosing a bank that will provide you with an ATM card and no in-network ATM fees is a good idea.
5. Mobile access
We all spend so much time on our phones these days so it makes sense to choose a savings account that can provide you with mobile access. Mobile banking has many perks including being able to view your account details, make transfers and deposits, and view statements.
If you normally receive checks, you’ll definitely want a bank that offers easy, free, and efficient mobile check deposit.
6. Federal deposit insurance
Finally, federal deposit insurance is an important feature you must have when considering a savings account. Make sure your funds will be insured either through the Federal Deposit Insurance Corporation or the National Credit Union Administration so you can receive your money back in the event that your bank ever went out of business.
Standard FDIC coverage is up to $250,000 per depositor, per issued bank.
Summary
When it comes to choosing the best savings account for you, take time to carefully review all your needs and options.
Always favor the low-fee and competitive interest rate options. And know that it’s perfectly okay to have two separate banks for your checking and savings accounts.
Compare more of today’s best high yield savings account rates here.
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Source: moneyunder30.com