You have some money saved up, but how do you find the right savings account? The following tips can help.
Types of savings account
When shopping for a savings account, you should know that there are two basic types.
- Passbook Account. With a passbook savings account, the bank gives you a booklet that you use to record deposits, withdrawals, and the interest. It is FDIC insured up to $100,000 ($250,000 for retirement accounts). It usually has few fees, a low or no minimum balance requirement, and a low interest rate.
- High Yield Savings Account. These types of savings accounts are also FDIC-insured. Also, the higher the balance that you maintain in the account, the higher interest rate the bank is usually willing to give you. You cannot usually use checks with this type of savings account but you may be able to link it to your checking account for deposits and withdrawals.
What to consider
In deciding which savings account is right for you, consider the following.
- How much money do you have to start the savings account? Certain accounts require a minimum deposit.
- Will there be limits on the number of withdrawals? How easily can you access the money if you need it?
- How convenient is the savings account? If you have to jump over a dozen hurdles to access your money, that may not make sense for you.
- What kind of interest can you earn in the savings account? Although a savings account with a bank is not where you are going to earn lots of interest, you do want to earn as much as possible. Find a savings account that offers a good rate.
Once you are armed with this information, your next step is to compare banks. Banks can offer different interest rates, but don’t just compare rates. Look at who has all of the services that you want with a savings account as well as the least in fees. Find the bank that has the services that you want without the fees, but also good interest rates. That can help you in finding the right savings account for you.
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