7 Questions to ask before choosing a savings account

Saving account is the first step to reach personal finance goals.
Saving account is the first step to reach personal finance goals.

If you often stash cash in your wardrobe and under your mattress, it might be the right time to open a savings account. A savings account is a basic bank account that will keep your money safe and offer interest on it. While most accounts are similar, there is a slight variation in the extra perks offered to the customers. Like many other things in life, you will want to look around to find the perfect account for your money. Discussed below are a few questions to ask before you open a savings account.

How much is the interest rate?

The first question to ask a bank is about their interest rate since that is what banks pay for the business. The rate will vary from one bank to another and there are many which offer a rate as low as 0.01%. It is important to know that there are options, especially if you are someone who prefers online banking. There are many online banks that offer interest rates better than traditional competitors. 

An ideal bank account will be based on your personal goals. There is no one size for all.

What is the best type of account to open?

Choosing the best saving account will depend on your personal goals. If you are looking for a safe place to keep the money, you can choose an average savings account. It will not earn you much interest but will keep your money safe. If you do not need money in the near future, you will be able to enjoy a better interest rate. Longer the time, better the rate of interest. You can also consider a CD as it offers the best interest in the long term. But there will be a penalty for early withdrawal. If you have access to a large amount of money, consider a money market savings account. It offers quick access to funds and pays a high-interest rate. There is no one-size-fits-all in choosing a savings account.

Does it offer mobile services?

Picking an online bank instead of one with several physical locations makes more sense. It will add convenience to your life and is up-to-date with the times. Check if the account is compatible with financial apps to make it easier for you to keep a track of your inflows and outflows. If you are attached to having a physical bank for all the banking, then this might not be a good option for you. However, if you are looking for a bank that offers complete digital services including same-day balance transfer and mobile deposits, then opting for an online bank will suit your needs.  

What are the fees?

Banks have a fee system for their services, whether it is for exceeding the limit for free monthly transactions or falling below the minimum balance requirement. The purpose is not to choose a bank with zero fees but to choose one where the fee structure is suitable for you. Ask for details from banks and make a comparison of the fee structure before making a decision. Some accounts may offer extra benefits with extra fees. If the benefits are suitable for your needs, it may be worth paying the fees. 

What is the initial deposit requirement?

Banks may require you to make a minimum deposit to the account when you open it. A lot of banks have a very small deposit requirement of $25 or less. If you choose an account with a higher yield, there could be a larger deposit requirement. Those who want to open an account with money already on hand, the initial deposit will not matter. But if you want to open an account to start savings, it will make sense to choose one with no minimum initial deposit. 

What are minimum-balance specifications?

Some accounts need you to maintain a minimum balance all the time. Many people open a saving bank account with a higher balance and reach the minimum balance requirement when they go to withdraw the funds. If you want to move the money around often, you need to ask your bank about the minimum-balance precondition.

Is my money insured?

It is ideal to ensure that the money will be insured before leaving it with a bank. Banks might go under, like any other business. You need to ensure that your hard-earned money is protected by the National Credit Union Administration or FDIC before opening an account. 

Savings account are a good way to start saving for an emergency. In order to choose the right bank for your needs, ask these questions, and then make a decision. Make a detailed comparison between the banks you choose and then sign on the documents. 

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