Virtually everyone can use a savings account to help build up their wealth, but how do you pick the best savings account with so many options available?
The number of options that are available might make it more difficult for you to choose a savings account. However, it also means that you can almost certainly find a savings account that fits your needs with a little bit of research, knowledge, and strategy.
Here are some things to consider when deciding on the right savings account for you.
How will you use the savings account
You may have multiple savings accounts to save money for all sorts of circumstances. Your savings account might be for an emergency fund, or so you can save up to make a down payment on a future home. You may have the account to save up for home renovations or to cover your travel funds.
Ideally, you don’t want to be moving money out of your savings account too frequently, but if you need to make a few withdrawals a month, you may want to consider transaction fees or limitations around how often you can withdraw money from your account. If you find that you’ll want to access the account a lot, you may be better off with a cash account than a savings account.
On the other hand, if you don’t plan on touching the money for at least five years, you may benefit more from investing the money.
Your priorities
Suppose you like having access to customer service or a bank with a physical location. You then would likely want to go to one of the traditional financial institutions for your account. If you don’t care about physical locations or if you care more about being able to bank from home, a virtual bank or one with a robust app will be more suited to you.
Make a list of what features are important to you in a banking experience and research which financial institutions can meet your needs.
The fees
Different savings accounts will have varying rules that affect fees. For example, some savings accounts require you to maintain a certain minimum balance to avoid fees, or they require you to deposit a certain amount to start the account. Other savings accounts have maintenance fees, which may erase any benefit obtained through their interest rates.
Your habits
While having all your accounts at the same financial institution can be more convenient, it may mean that you’re more likely to dip into your savings to cover unnecessary expenses; setting up your savings account in another institution may be worthwhile.
However, if it’s easier for you to transfer money into your account in the same institution, and you know you won’t touch that money, keeping your accounts with the same bank may be ideal.
Final thoughts
You aren’t limited to keeping all your accounts at one bank. Explore various options to find a financial institution that offers an account that best meets your needs. Online banks and credit unions also offer savings accounts and may have options that work for you.
If you have any questions, feel free to Join the conversation…