How To Choose The Right 10 Savings Account
3 Min Read
A savings account allows you to earn interest on the cash that you have stored securely in your account. Savings accounts work in a sense that you lend money to the bank by depositing it in their bank. The money turns around and is offered as a loan to other customers.
The banks levy interest rates on the loans that they provide to their customers and offer interest on the money that is deposited in the savings account. There are some savings accounts that offer great interest rates. Before discussing which are the top 10 savings accounts that you should consider, let’s get to know the basics of the same.
The types of savings accounts available in the US can vary based on different financial goals. Here are three basic types:
- Traditional Savings Accounts: These are savings accounts provided by banks and credit unions. They typically offer a low interest rate but are easy to open and maintain. Traditional savings accounts are suitable for short-term savings goals, emergency funds, or as a general-purpose savings account.
- High-Yield Savings Accounts: High-yield savings accounts offer a higher interest rate compared to traditional savings accounts. They are ideal for individuals looking to earn more interest on their savings while still maintaining easy access to their funds. These accounts often require a higher minimum balance and may have some restrictions or fees if the balance falls below a certain threshold.
- Money Market Accounts (MMAs): Money market accounts combine features of savings and checking accounts. They typically offer higher interest rates than traditional savings accounts and may provide limited check-writing privileges. MMAs often require a higher minimum balance compared to regular savings accounts but offer better liquidity and interest rates.
What are the things that you should consider before opening a savings account?
- Interest Rates (APY): To compare the annual percentage yield (APY) offered by each account. A higher APY means your savings will earn more interest over time. Look for accounts that offer competitive rates to maximize your savings growth.
- Fees and Charges: Check the fee structure associated with the account. This includes monthly maintenance fees, minimum balance fees, overdraft fees, ATM fees, and any other charges. Opt for an account with minimal fees, especially if you can meet the requirements to waive them.
- Minimum Balance Requirements: Determine if the account has a minimum balance requirement. Some accounts may waive monthly fees if you maintain a certain minimum balance. Ensure the requirement aligns with your financial situation and savings goals.
- Accessibility and convenience: Consider how easy it is to access your funds. Look for features such as online banking, mobile app access, ATM networks, and customer service availability. Accessibility is crucial for managing your savings effectively.
- Federal Deposit Insurance: Ensure the bank or credit union is FDIC-insured (or NCUA-insured for credit unions). FDIC insurance protects your deposits up to $250,000 per depositor, per insured bank, providing peace of mind that your money is safe.
By carefully evaluating these factors, you can choose a savings account that best suits your financial needs and goals. Researching and comparing multiple accounts will help you find one that offers the right combination of interest rates, fees, accessibility, and security for your savings.
Here are details about some of the top savings accounts based on reviews and services provided:
- Aspiration Summit: Offers a 1% APY on balances over $2,500, unlimited ATM reimbursements, no monthly maintenance fees, and no minimum balance requirement.
- Ally Bank: Provides competitive interest rates and access to over 43,000 free ATMs. It operates as an online-only bank with 24/7 customer service.
- Bank5 Connect: Features a lower-than-average $15 overdraft penalty compared to the national median of $34. It offers online banking services.
- Alliant Credit Union: Offers features like direct deposit, ATM access, and mobile deposits, qualifying for a 0.65% APY on savings accounts.
- Other Banks: Also worth considering are Capital One, Discover Bank, Simple Bank, Chime, CitiBank, and Synchrony Bank, which offer similar competitive features and services.
These banks provide various benefits such as high APYs, low fees, extensive ATM access, and robust online banking options. Choosing the right one depends on your specific financial needs and preferences.