Is your savings account really putting your money to work? The bank or financial institutions that currently hold your savings accounts may not be offering the best interest rates. They could even be charging you a pretty penny for maintaining your account. High-yield savings accounts are among the lowest-risk investments you can make, and you need at least one savings account to keep your finances organized. It pays to shop around.
Bankrate.com reports the average savings account rate is 0.678% and the average minimum deposit required is $1,943. If your bank is offering a much lower rate than the average, you be missing out on significant returns on your investment.
Use these tips to find a better savings account:
Consider the Amount You Plan to Deposit
Are you setting up an emergency fund or do you just need a savings account that you can transfer funds from and to a checking account? Consider the value of your deposit in the long-term. If you plan to withdraw money regularly from your savings account, it may not be worth changing banks or financial institutions just for a marginally higher rate. If you find a bank that is offering one or two percentage higher interest rates, you may very well benefit from setting up an emergency fund savings account with a new bank.
Inquire About New Customer Deals
Some banks and financial institutions offer money or rewards to new customers opening up a savings account. Find out if you would be eligible to receive any of these freebies, and if there is monetary compensation involved, how long you have to maintain the account in order to receive the funds. Make sure you read the terms and conditions of the account agreement carefully, and understand what the minimum balance requirements are.
Learn About Minimum Balance Requirements and Fees
Every bank and financial institution has different policies about minimum balance requirements, and how they handle account fees. Find out if your bank requires you to maintain a minimum balance on your savings account, and what the penalty is if your balance falls below the minimum. It's also a god idea to learn about any transaction fees and transfer fees for your particular account. Some banks charge a modest fee when transferring funds to an outside bank, but don't charge any fees for transferring from account to account within the bank.
Jump Online to Review Rates
Most online savings accounts offer higher-than-average rates than those you would find at a local bank, credit union or financial institution. If you're comfortable with managing funds and authorizing transactions online, consider opening up an online high-yield savings account. Many online savings accounts command rates upward of 1% and don't charge maintenance or annual fees. These can be a convenient alternative to a standard savings account, and may be able to generate a higher return on your investment.
Learn About Withdrawal Limits
Many larger, corporate banks limit the number of withdrawals you can make to just two to three transactions per month. Consider how often you really need access to your savings account and choose a bank that doesn't have strict limits if you do plan to transfer or withdraw funds regularly.
Inquire About Overdraft Protection
What happens if you write a check from your savings account and don't have enough funds in the bank? If you have a checking account or another savings account with the same bank, you can set up overdraft protection so that the bank will automatically transfer funds to the depleted account when needed. Again, think about how often you will be paying for things right out of your savings account. If you can keep your savings and checking accounts separate, you may not even need to worry about overdraft fees.