5 Things to Know About Savings Accounts

A savings account is an important tool to help you save and grow your money. In most cases, it’s a pretty straightforward bank deposit account that enables you to save money while earning interest. Learn more about savings accounts; including the different types of accounts available on the market and the different interest rates for each type of savings account.

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#1 Banks Offer Some of the Best Interest Rates on Savings

Naturally, most people would consider a savings account that gives the best interest rates. Over the last few years, many US banks have greatly reduced the interest on savings, with some traditional interest rates on savings standing at only 0.25% APY (annual percentage yield). Despite this, you can still find banks with interest rates of up to 2.15% APY, although these might require you to make additional financial commitments, like enrolling for a health plan through the bank.

#2 There Are Savings Accounts Promotions That You Could Take Advantage Of

According to a study by J.D. Power and Associates, in 2012, 10 out of 100 customers change their primary bank accounts every year. By simply changing your primary bank account, you could gain access to some lucrative promotional offers from rival banks. While many financial institutions run promotional campaigns that promise high interest rates in an effort to lure more customers, you could take advantage of these promotions in order to secure a competitive interest rate on your savings. Make sure to check the fine print and don’t get lured in simply by the added benefits of free concert tickets or a new car, which some banks and credit unions are known to offer.

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#3 Savings Accounts Should Have No Fees

The idea of a savings account is to grow your money. As such, you need to settle on a savings account that charges no fees, as fees will simply eat up your savings.Unfortunately, most savings accounts charge fees, including a monthly service charge for customers who fail to maintain a minimum balance, a fee for excess withdrawals and a fee for account inactivity. Some banks offer savings accounts with no fees, but you might need to maintain a certain minimum balance in order to avoid these fees. While these banks are limited, to get the best deal, take the time to shop around.

#4 Online-Only Savings Accounts Have the Best Interest Rates

Online-only savings accounts are gaining popularity for all the right reasons; they offer the highest interest rates on savings. It’s easy to see why. Online banks have small overheads compared to traditional brick and mortar financial institutions. As such, they tend to pass on the savings to their customers, in the form of higher interest rates. With online-only savings accounts, you can comfortably manage your savings remotely,without ever having to visit a physical bank branch.

#5 Money Market Accounts are Savings Accounts

A money market account is a savings tool that also has the functionality of a checking account. The benefit of a money market account is that it promises earnings that are higher than those of traditional savings accounts. However, unlike savings accounts,opening a money market account requires you to make a higher opening deposit. One of the key advantages of this type of account though is its flexibility. It allows customers to make up to six withdrawals per month by check, draft, electronic transfer or debit card. Money markets accounts are also safe as they are federally insured by the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Corporation (FDIC).