Whether You Have a Savings Account or Plan to Open One, Make Sure It Works for You
Whether you already have a savings account or you're looking to open one, there are some things to keep in mind that'll be favorable to you. Here's what to look for in a savings account and signs to keep an eye out for when it's time to look for a new one.
For most people, opening a savings account is fundamental to ensure you're financially stable. Regardless of how much you've saved, having some form of savings is important. Money stored away in savings can be allocated as we see fit, whether it's put into a sinking fund that saves up a lump sum for something large or keeping money on hand for impulse purchases. Savings accounts have a positive impact on our personal finances.
Whether you already have a savings account or looking to open one, there are a few things you should keep in mind. While savings accounts are created to work in your financial favor, they also give us the opportunity to re-evaluate how we save and what our savings goals are. Here's what to look for in a savings account and signs to keep an eye out for when it's time to look for a new one.
What should you look for in a current savings account?
Key indicating factors are incredibly telling about the health and wellness of your savings account. The single most important aspect of your savings account is interest rates. Interest rates are the baked-in feature that allows you to grow your account with rates offered by your bank. Along with interest rates comes an applied monthly fee which looks a lot like charges from your bank.
Some banks require you to make a minimum deposit into your account outside of your first deposit to kick off your savings. When considering the value of your savings account, decide if you want to contribute to it regularly and how much you want to put in. If you want more control over your savings account, look for a plan that lets you make deposits when you want. Also, some banks allow for automatic digital transfers, which can be beneficial.
If you're in a pinch for cash, having access to your savings account during a time of need is an important feature but at the same time, you want your account to be protected. Make sure it's covered with deposit insurance through the FDIC, which is a primary feature of savings accounts that will give you peace of mind and keep your money protected.
What should you look for in a new savings account?
While it's important to safeguard cash that you're able to put away, you should also expect more out of your savings account. Your savings should be able to grow so that you're able to meet other goals you had in mind. You should be able to keep your emergency fund afloat without facing any anxiety over it.
What are the signs that it's time to find a different savings account?
If your savings account isn't earning much interest or hasn't displayed any notable dent in financial growth, it might be time to open a new account. Even though the average savings account earns 0.37 percent in interest, per the FDIC, you can stretch that to five percent APY. You can increase interest rates to one percent when opening a new savings account. If you're stuck paying multiple fees on your account, that's also a surefire sign to move on to another account.
Transactional fees may apply, but these fees aren't always necessary and can be disputed. If you can find a new account that eliminates them, you should make the switch altogether. Ask your bank about fee-free options for savings accounts. If you're having difficulty accessing the money you've put into your savings or exceeding deposit limits, you should open a new savings account.