Savings accounts are where many people hang on to cash for future use – some people save for emergencies, vacations and travel, and the items they would like to buy someday when they have saved up enough money. People feel confident with their money in savings accounts, because they are insured by the Federal government and offer some growth over time.
If you're going to use a savings account to hang on to your money rather than just stuffing it in a shoe box under the bed, you should take a moment to compare different types of savings accounts in order to get the most out of your money.
When looking at different savings accounts, take note of how much interest they will give you. The higher the interest rate, the better. Keep an eye out for savings accounts that charge different interest rates based on the amount of your balance – and consider how much you will typically maintain in your savings account to determine if you qualify for a higher interest rate or lower interest rate.
How easy do you want to have access to your money? If you're trying to save money without dipping into it, you may choose an account that doesn't have an ATM card, or that requires advance notice for withdrawing money, for example.
On the other hand, if you use your savings account to hold money that you use for your every day spending needs, you'll want to look at accounts that make it possible to withdraw your money instantly, and without penalty or fees.
Fees and Service Charges
Take a look at the fees and service charges that each of the savings accounts you are comparing charge. Some will charge a monthly service charge if your balance is below a minimum level – if you think you may not be able to maintain their minimum balance to avoid the monthly service charge, it's probably a good idea to look at a different account. Monthly service charges almost always cost more than the interest you'll earn.
If you tend to move your money between accounts, you'll want to make sure you won't be charged fees for transferring money. If you rarely move money between accounts that way, a fee for that service shouldn't deter you from an otherwise great savings account.
If you access money via an ATM, you'll want to make sure there are no fees for doing so if possible – or at least select a savings account with the lowest ATM fees.
Some savings accounts will give a promotional rate to encourage new customers to open accounts. A promotional rate may offer higher interest earnings for a certain, temporary period of time. If you are going to take advantage of a promotion – just be sure you understand the rates and fees of the account once the promotional period ends to determine if you'll keep your money with that account or if you'll start looking for a new savings account at the end of the promotional offer.
Graduated Interest Rates
If you know your savings will increase over time, you might want to look at savings accounts with graduated interest rates. This means you'll get higher interest with more money in the account, and lower interest with a lower balance.
Multiple Savings Accounts
Many people determine they need more than one savings account. Sometimes having a mix of savings accounts is better than trying to find a “one-size-fits-all” savings account for all of your saving needs. For example, you might have a long term savings for your future needs, an emergency fund for unexpected problems that might come up that require access to money, and another account for specific savings – like Christmas shopping or vacations.