How to Choose the Right Savings Account for You
Virtually everyone can use a savings account to help build up their wealth, but with so many options available, how do you pick the best savings account for you?
The number of options available might make it more difficult to select which savings account to choose, but it also means that with a little bit of knowledge, research and strategy, you can almost certainly find a savings account that fits your needs.
Here are some things to consider when deciding on the right savings account for you.
1. How you’ll use the account
You could have multiple savings accounts meant to save money for all sorts of occurrences. Your savings account might be for an emergency fund or so you can save up to make a down payment on a future home. You may have the account to save up your travel funds or to cover home renovations.
Ideally, you don’t want to be moving money out of your savings account too frequently, but if you need to make a few withdrawals a month, you’ll want to consider transaction fees or limitations around how often you can take money from your account. If you find you’ll want to access the account a lot, you may be better off with a cash account as opposed to a savings account.
On the other hand, if you don’t plan on touching the money for at least five years, you may be further ahead to invest the money.
2. Your priorities
If you like having access to customer service or a bank with a physical location, you’ll likely want to go to one of the traditional financial institutions for your savings account. If you don’t care about physical locations or if you care more about being able to bank from the comfort of your home, a virtual bank or one with a robust app will be better for you.
Make a list of the features that are important to you in a banking experience and research which financial institutions meet those needs.
3. The fees
Different savings accounts have varying rules that affect fees. For example, some savings accounts require you to maintain a certain minimum balance to avoid fees, or they require you to deposit a certain amount to start the account. Other savings accounts have maintenance fees, which may erase any benefit obtained through their interest rates.
4. Your habits
While it may be more convenient to have your savings account at the same financial institution as your other accounts, if this means you’re more likely to dip into your savings to cover unnecessary expenses, it may be worthwhile to set up the account in another institution.
On the other hand, if it’s easier for you to transfer money into your savings account in the same institution and you know you won’t touch that money, it may be a better idea to keep your accounts with the same bank.
You aren’t limited to keeping all your accounts at one bank. Explore various options to find the financial institution that offers an account that best meets your needs. Online banks and credit unions also offer savings accounts and may have options that work for you.