Opening a savings account is a smart idea to help you set aside money in the event of an emergency. A savings account offered in addition to a checking account usually has a very low interest rate, which is why it is a smart idea to compare savings account rates. Savings account with the highest interest rates are traditionally found online as these banks can offer higher interest based on lower operating costs.
Why Savings Accounts
With CD accounts, money market accounts, and other investment options you may be wondering if opening a high interest savings account is the best investment decision. Having money into a liquid account is a nice option as you will be able to pull out the funds immediately in the event of an emergency. Some of the other accounts like CDs have time limits set on them so you won’t be able to withdrawal the funds from these accounts for a certain amount of time. Using a traditional savings account you will not need to worry about facing a penalty for pulling the money out of the account.
Safety With Savings
One of the great benefits of opening a savings account is the security that it can provide for your money. As long as you are investing your money with a bank that is secured by the FDIC, you will be able to recover up to $250,000 in the event that the bank fails. Most banks are backed by the FDIC but it is always a good idea to double check on the security just in case you are worried. Banks that offer a higher interest rate may be insuring their accounts without the FDIC so this is one thing to consider when you are comparing savings account rates. It is also important that you check on the security of the banks website as well. Always work with a bank that has a secured server in order to protect your confidential account information. You can also help with account security by creating a strong password for your account and using a good anti-virus program to prevent threats to your computer.
A Reason To Save
When you compare savings accounts you need to look at the interest rate but also to compare it to your savings goals. What is the purpose for saving money in the account? Are you using it for a short-term need like a down payment on a car or to help you save money to pay for next year’s college tuition? Having your savings goals in mind will make it easier on you to find a high interest savings account that can provide you with the best interest rate to make your savings goals possible. Even if you just like to save money regularly, it is still a good idea to compare savings account interest rates to find which bank can make it easier for you to earn more money.
Online Banks Have The Best Rates
When you are looking into savings account rates you want to consider all of your options. The banking industry is one that is quite competitive and you will find that the best rates on savings accounts are usually found online. Use a bank comparison tool in order to help you find the best rates and to compare it to account fees and other things that can make an impact on your ability to save money.
Opening A Savings Account
It is fairly easy to open a savings account. Compare current account savings interest rates in order to find out which banks are going to help you save your money quickly. Once you have your list narrowed down and you compare account fees and deposit requirements, you can easily open your online savings account. To open a savings account you will need to have some personal information handy. Depending upon the bank you may need to include your social security number and other financial information. Then you will need to set up an automatic transfer to the savings account or you will need to at least link it to your checking account so you can transfer money to it. Some of the online banks will allow you to mail in checks to them since they don’t have physical branch locations that you can go to. The savings account you choose should have a higher interest rate from what you see at your local bank with a standard savings account. Although the interest rates are at an all-time low, they have been much higher in the past which gives hope that your interest rate on savings accounts will increase again and you can earn more money.
Banks are subject to the interest rate set by the Federal Reserve. Due to this you have to pay attention to the interest rate on your account and to notice if there are any changes in account terms. It is quite common for bank terms to change yearly and they will start adding in hidden finance charges and other things. Check the requirements from the bank and make sure you aren’t going to have fees on the account that were not there when you compared rates on savings accounts. Sometimes banks will have minimum balance requirements, usually in order to protect them from dealing with overdrafts on their customer’s part. Always research information about the bank requirements and research the reputation of the bank over the past year in order to select the right bank.
Higher Interest Rates
To acquire the best interest rates on savings accounts you have to compare rates with several banks and to continually compare rates often. You might want to move your money to a new bank if you find that the interest rate on your savings account has dropped substantially. Just be careful about becoming a person that chases rates. In many instances you could be missing out on higher returns because you are impatient with the interest rate and you end up acquiring accounts with closing fees and other account fees. There are several charges that you have to look at when you are comparing rates including the following:
- Money transfer
- ATM withdrawal
- Monthly or yearly service charge
- Cancellation fee
- Balance limit fee
Comparing bank rates and really understanding what your options are will help you to work with the best banks out there and this will be able to help you quickly grow your savings account.