For those who have recently started working or those with multiple expenses monthly, it can be difficult to start saving money at home and especially in a financial institution. Having a savings account is vital both for short-term and long-term goals.
Since you’re here, we assume that you realize the importance of saving money – independence, security against unforeseen expenses, financial back-up, retirement, and other circumstances. In this article, we will discuss some of the features to look out for before you open a savings account with a financial institution like banks.
First off, what’s a savings account?
Very simply, a savings account is an interest-bearing deposit account kept at a bank or other financial institution. These accounts usually offer a modest interest rate, but their reliability and security make them a wise option for parking cash you want available for your short or long-term needs.
Features to consider before opening a savings account
Quick and easy process. Opening a savings account should be a straightforward and easy process. The best banks allow you to open an account without a hitch and hassle whether you’re doing it online or in a physical branch. Online banks provide faster, streamlined applications when opening a savings account.
Minimum or no balance requirement. Saving money is especially difficult for young people just starting. One research revealed that their average millennial net worth is only around $8000. Some banks will charge customers a fee when they fail to maintain a minimum balance. A bank account with no minimum deposit or balance requirement can make it easier for young and old savers to start since savings can’t be lost to fees.
Online transfers between accounts. Online banking gives you better control of your money as well as easy, instant access to your savings. It also helps you to save by allowing you to transfer funds straight from your checking account into your savings account.
No monthly service fees. Maintenance fees or service fees will easily diminish savings, especially for starters. The best banks will provide a savings account without monthly service fees.
Direct deposit into savings or automatic savings transfers. Financial experts/consultants recommend finding an account that will let you directly deposit a portion or even all of your paycheck into your savings account. With this, your money moves instantly into savings before you become tempted to use it. Automatic savings transfer also assists with saving, since funds are automatically transferred from checking to a savings account at set intervals.
Ways to maximize earnings from a savings account
Look for banks that offer higher interest rates and additional interest when no withdrawals are made. Some banks might also give additional quarterly or annual bonus interest on top of monthly interest for a savings account that has no withdrawal transaction for these certain periods.
Ready to shop for a new savings account? Remember to check the types available as there are more than one. Make sure to consider the rates for each as well as their advantages over other types. The key is to shop around, starting with top banks to where you currently hold your checking account. Best of luck!