Best Features to Look for in a Savings Account
Opening a savings account can be a step toward financial freedom.
Savings accounts allow you to earn interest on your deposits, keep funds safe, and money is easily accessible in an emergency. Learn about different features and get started building your financial future today.
Minimum Opening Deposit
Many traditional or regular savings accounts offer a low deposit to open. Credit unions will open a savings account with as little as $5. With a small deposit, savings accounts are a great way to introduce children to the power of saving.
Low-Balance Savings Account
A low-balance savings account allows for the lowest amount of money to keep the account open. If you go below that, a service fee may be charged. In many cases, you can avoid the fee by having a linked checking account, being a minor, over the age of 55, or being a student. Make sure to know all the details upon opening.
No-Fee Savings Account
A no-fee savings account may get you one step closer to your savings goals. Also called a free savings account, these no-fee accounts will make your money work harder. Banks and credit unions will have a list of waived fees on a no-fee account. Here are a few of the fees that may be waived.
- Maintenance fees
- Minimum balance
- A limited number of deposits, withdrawals, or transfers
- Overdraft fees
- ATM usage fees (as long as it’s in the network)
- Using an ATM card too many times
- Replacing a lost ATM card too many times
Maintenance fees are a broad term and can mean any fee a financial institution charges you for working with the bank or credit union. For example, some banks will charge a maintenance fee if you don’t set up online access or paperless e-statements. Banks and credit unions are required to disclose fees upfront. Read the fine print, understand which fees may incur, and how to avoid them.
Interest Bearing Savings
Banks and credit unions will pay you to keep your money with them! Payment is through compound interest and is earned either daily or monthly. Rates vary, and basic interest-bearing savings accounts generally pay the least. Credit unions may have better rates than traditional banks. Find a credit union in your area to see what their current interest rates are.
There are high interest-bearing savings accounts too. These savings accounts will offer a much higher rate than a basic account. High-interest rate accounts generally have requirements such as a higher balance, limits on withdrawals and deposits, and may require the use of a debit card.
Savings Overdraft Protection
Sometimes accidents happen, and we overdraw from our checking account. Setting up savings overdraft protection will pull funds from your savings to cover the overdraft from your checking account. You must link the checking and savings account, and a transfer fee may apply.
Direct deposit into your savings account is one of the easiest ways to grow your funds. You’ll need first to set up direct deposit through your employer and decide how much you want to direct deposit. You can do a percentage of your paycheck (60% into checking 40% into savings) or an exact dollar amount. You’ll need the routing and account number from your savings account. You can find these numbers on a deposit slip, your online account information, or a financial representative can locate them for you.
Further Resources on the Features of a Savings Account
Here are some additional resources on the features of a savings account:
- The Penny Hoarder: Offers a great blog article about 8 questions to ask yourself to choose the right savings account for you based on their features.
- Investopedia: This article explains what a high-yield savings account is and what features to look for in one to achieve your financial goals.
- Bankrate: Gives insight into one feature of a savings account: overdraft protection in this article.
Open a Savings Account Today
A savings account is always a good idea. It’s a great place to store cash for an emergency fund, teach a child the benefits of saving, and is a secure place to store funds. You can even earn money on your deposits. Explore your options for savings accounts and all your financial needs at a credit union.