Every bank has different policies and offers. Some have better interest bearing savings accounts and certificates of deposits, while others may have slightly lower interests rates for savings accounts and certificates of deposits but their customer service may be excellent and have no maintenance fees. If you’re considering to open a savings account, and wondering what sorts of factors you should be looking for when applying for a savings account – read on.
The current market is going through trends that have not been seen in decades. Interest rates for savings are at a historical low, while Americans are saving at their highest rate of 2.9% – which hasn’t happened for decades. If you need to hop on the savings bandwagon, regardless of the current interest rates, here are some things you may want to consider:
Consider your reasons for opening the account
- Are you planning on just stowing away your cash for a rainy day?
- Are you trying to save up for a down payment for a home?
- Or you just need a place to store your money for a short term?
Once you decide how much cash you need on hand, you can decide between an online savings account (which tends to pay higher interest but may take a couple of days to get your money) or having an account at the same place as your checking account. If you happen to open your savings account with the same bank as your checking, your accounts can be tied to each other so the money can be easily accessible at the ATMs 24/7.
Then you need to investigate which bank offers better interest rates. Banks are always competing with each other to get business – so you’ll have no problem finding the right bank that will fit your personal needs. However, while you’re searching – be careful and read all the fine print so that you’re not stuck with a bank product you’re not going to be happy with down the road.
Also, consider the type of withdrawal restrictions on your account. If you really know you do not want to have access to your money easily, opt into an account capping your monthly withdrawals. Those types of savings accounts generally charge a high fee if you access your money too often, so that may deter you from dipping into your savings.
Here is a general guideline to think about when you’re shopping around for a savings account:
- Minimum deposit restrictions
- Number of withdrawal
- Short term bonuses (such as a cash incentives) for opening the account