6 questions to ask before choosing a savings account
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
This story is part of a sponsorship — one way that TPG continues to provide our readers with free news and advice about travel.
If your piggy bank is getting full or you’re sick of stashing cash under the mattress and floorboards, it might be time to open a savings account. Most savings accounts are relatively similar, but the quality of service you receive from bank to bank can vary quite a bit.
For example, some banks might offer extra free benefits and perks to their customers, while others might regularly charge high fees for the basics. Like most things in life, you’ll want to shop around in order to get the best deal and find the perfect savings account for your money. Here are six questions to ask before choosing a savings account.
What are the interest rates?
Probably the first and most important question to ask a bank is what their interest rates are, since this is essentially what banks pay you for the privilege of your business. According to the Federal Deposit Insurance Corporation (FDIC), the national average annual percentage yield (APY) for savings accounts is currently 0.09%.
This is the interest rate many FDIC-insured banks are currently offering their customers. However, it’s not the rate you’ll find at every single bank, especially the brick-and-mortar ones that tend to still offer a measly 0.01%.
In a case like this, it’s good to know you have options, particularly if you’re someone who’s comfortable with online banking. Many online-only institutions are starting to offer customers much higher interest rates than their old-school competitors— sometimes as much as 2%.
Is it mobile-friendly?
Another advantage of choosing an online bank rather than one with a bunch of physical locations is that they tend to be more current with the times. If you’re really attached to having a physical bank where you can do all of your banking, this might not be for you. But if you’re looking for a bank that offers comprehensive digital services (like same-day mobile deposits and balance transfers) then choosing an online bank will likely fall more in line with your expectations.
Are there any fees?
Most banks have some kind of fee system, whether it’s for falling below minimum balances or for exceeding the fee-free limit for monthly transactions. The goal isn’t necessarily to find a bank with no fees, but to find one where the fee structure works for you.
Get some details from a few banks and compare their fee structures. Depending on your financial goals and how you tend to move money around, a few low fees (as long as you know what to expect) might not be a problem.
Or minimum-balance requirements?
Some savings accounts require a minimum balance at all times. If you’re trying to start a savings account with $50, you’ve probably come up against this rule already. Often people start savings accounts with much higher balances, only to bump up against the minimum-balance requirements later on when they go to withdraw that cash. If you plan on moving your money around frequently, be sure to ask about your bank’s minimum-balance requirements and be confident that you can meet them at all times to avoid any unexpected fees.
What about limited transactions?
Much like minimum-balance requirements, many banks limit the number of withdrawals you make out of your savings account each month. This is because they tend to only keep a small portion of your balance in their reserves and invest the rest elsewhere.
In order to ensure that they can properly complete your transactions and make their many other investments, banks typically limit you to what’s called “six convenient withdrawals” per month. Convenient transactions include most electronic transfers, as well as any withdrawals made with your debit card or written checks. Be sure to familiarize yourself with your bank’s policy ahead of time to avoid any fees or penalties.
Is my savings insured?
It’s always a good idea to make sure your money will be insured before entrusting it to a bank. Banks can go under, just like any business. Make sure your investment is protected— either by the FDIC or the National Credit Union Administration before opening up an account.
Savings accounts are a great way to stash some money for a rainy day, but remember that they’ll never earn you a whole lot on your investment. When it comes to big savings, like for retirement and other major financial goals, you’ll want to invest these sums in a way that they can actually grow significantly— and be worth something when you finally need them.
Welcome to The Points Guy!
Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees