Is a Savings Account Right For You?

A savings account is a good place to put money you won’t need immediately. They generally pay more interest than checking accounts and you’re still able to withdraw or transfer funds when you need to.

Like other accounts, the types of savings accounts offered by different banks vary greatly. It’s worth shopping around to find one that pays the most interest and that has rules you are comfortable with.

Some require you to keep a minimum balance. While some limit the number of times you can withdraw money each month. Others offer ATM cards so you can withdraw funds after banking hours.

Savings in Piggy Bank

It’s important to talk with your banker and have them explain what types of accounts your bank offers. If you’d like, you can also check with other banks. You can have accounts in as many banks as you want.

With online banking it’s much easier to manage accounts with different financial institutions. So never feel like you’re stuck with the bank you picked initially.

Your savings account can also be linked to your checking account which can help prevent overdrafts. If the funds are not available for a check you write, the bank will deduct the amount to cover the check from your savings. There is sometimes a fee for this but it’s usually less than a bad check fee.

Like most bank accounts, you will receive a statement each month showing debits and credits to your account along with any fees or fines. These should be recorded in your account register. The statement balance and your account register balance should always match at the end of the month.

The main purpose of any interest bearing account is to make your money work for you. Compound interest can be used to your advantage with this type of account. Check out the section on compound interest to better understand how this affects you.

With most interest bearing accounts, the interest rate is variable. This means it fluctuates based on rates set by the Federal Reserve.

One thing you should remember is that most accounts that pay higher interest rates (or high-yield accounts) also have stricter rules. If you can work within the rules, you stand to make a lot more with your money. So keep an open mind.

Another type of interest-bearing account is a money market account. These often pay even more interest. The rules are different for them but sometimes they’re a good option.

From Savings Account to Banking Information