10 Key Benefits of Opening a Savings Account
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What Is a Savings Account?
Types of Savings Accounts
Traditional savings accounts These accounts are offered by banks and credit unions with traditional brick-and-mortar locations. Customers may be able to manage their accounts online, with a mobile app, or by phone – but the branch is also there if you want to make a transaction with a teller or discuss your account in person. Interest rates on traditional savings account are generally low, High-yield savings accounts If you’re looking to maximize the growth in your account with a more competitive APY, you may want to consider a high-yield savings account. These accounts are often offered by online-only banks, which means you won’t get any face time with a teller or manager as would with a traditional bank or credit union. But you’ll likely find higher APRs, lower fees, and lower minimum balance requirements. Specialty savings accounts These accounts are designed for specific people and/or specific savings goals. For example, you can find savings accounts set up specifically to help young children, teens, and college students learn about managing money. You can also open an account set up for saving for college, such as a 529 account. Money market savings accounts This type of savings account offers some of the features of a checking account, making it a type of hybrid account. Your deposits earn interest, plus you may receive checks and a debit card. Money market savings accounts typically offer a higher APY than traditional savings accounts, but will typically require you to maintain a higher minimum balance. Certificates of deposit A certificate of deposit (CD) offers a different way to save. They usually provide a higher APY than a traditional savings account, but with less accessibility. With a CD, you agree to leave your money untouched for a set period of time (such as six months or a year). During that time your money earns a guaranteed APY. When the CD “matures,” you can take the money or roll it into a new CD. If you withdraw the money before the CD’s maturation date, however, you may have to pay a penalty.
What Are the Benefits of a Savings Account?
1. You Can Keep Your Savings Separate
2. The Money Is Insured
3. Your Money Is Accessible
4. Your Money Earns Money
5. You Can Put Savings on Auto Pilot
6. Some Banks Offer Incentives for Savers
7. Less Temptation to Withdraw
8. A Joint Account Can Help Couples Save Together
9. Can Help You Teach Your Kids to Save
10. You Don’t Need a Ton of Cash to Get Started
What to Look for In a Savings Account
A competitive APY FDIC or NCUA coverage Low or no monthly fees 24/7 accessibility with fee-free ATMs Low or no minimum balance requirement An initial deposit requirement you an afford Online banking and/or a mobile banking app Additional perks
How to Apply for a Savings Account
Driver’s license or some other government-issued identification (such as a passport) Social Security number Date of birth Current address (and proof that it’s your address if it differs from your ID) Contact information (phone and email) Checking account information (if you’re using your checking account to fund your savings account or linking the two accounts) Designated beneficiary (if it’s an individual account)
Frequently Asked Questions
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