No-Nonsense Guide to Savings Accounts
Navigating the process of setting up a savings account: Key actions to follow in 7 essential steps.
Got cash lying around? Put it in a savings account! Here's a step-by-step lowdown on how to land a high-yield account that'll help you grow that stash without charging your wallet with hidden fees.
1. Pick the perfect piggy bank
Choose a bank that suits your lifestyle and needs. Essential features to consider include:
- Competitive APY (annual percentage yield)
- Low or zero maintenance fees
- Access to fee-free ATMs
- Branches nearby
- Online and mobile banking services
- FDIC or NCUA insurance coverage
Some banks offer various saving options, so compare them, and keep an eye out for any unique features specific to each account. Consider a bank that aligns with your checking account for higher APYs, or relationship rates. However, ensure it fits your personal financial goals, like savings for a home, vehicle, or rainy days.
2. Gather your essential documents
Before opening your account, make sure you've got the following info and docs ready to go:
- Government-issued ID (e.g., driver's license, passport)
- Social Security number
- Birthdate
- Current address and proof of that address (if your ID lists a previous one)
- Contact details
- Bank account info to fund your new account (if applicable)
You might need to lift a credit freeze to open a new account, should you have one in place.
3. Decide on a joint or individual account
- Want an account just for yourself? Start solo with an individual account.
- Planning to share funds with a relative or partner? Go for a joint account.
- Shared accounts offer additional benefits, such as a higher level of FDIC or NCUA insurance (up to $500,000) and effortless access to funds for other owners.
4. Fill out the form
Submit your information, wait for your account approval, and bam! You're one step closer to a secure savings nest.
5. Fuel your savings robot
Depending on the account's minimum opening balance, you can fund it with a quick deposit using cash, a check, or by making an electronic deposit via mobile check deposit or linked account transfer.
Stay aware of potential monthly maintenance fees that might eat into your savings balance by maintaining a high enough balance or meeting set requirements.
6. Add a designated beneficiary
Choosing a beneficiary ensures your hard-earned cash ends up in the right hands. Naming a beneficiary is crucial for individual and joint accounts, even if one account owner passes away.
7. Design your savings route
Opening a savings account is the first step on your money-saving journey. To make the most out of your account:
- Set specific savings goals.
- Create a savings budget to help achieve these goals.
- Automate your savings by setting up monthly or bi-weekly automatic transfers from checking to savings. Alternatively, split a portion of your paycheck directly into your savings account via direct deposit.
Online Savings Accounts - For the Tech-Savvy
The majority of banks offer online and mobile banking, allowing customers to open accounts digitally. Online banks without physical branches typically require online account opening.
Online banks may provide the best savings account options, including low minimum balances, zero monthly fees, high APYs, and convenience for those comfortable handling most transactions online or via mobile devices.
Individuals who prefer in-person banking might favor a brick-and-mortar bank with branches for easier access.
Choosing the Best Savings Account
APY
Higher APY means quicker savings growth. The more considerable the APY difference, the more significant the long-term positive impact.
Monthly Fees
Some banks charge a monthly maintenance fee unless you meet certain conditions, such as making a specific number of transactions per statement period, keeping a set balance, or enrolling in direct deposit.
Avoid accounts with monthly fees to avoid losing a chunk of your savings. Be cautious of early account closure fees, which some banks may charge for closing an account within the initial 90 to 180 days of opening it.
FDIC Insured
Ensure the bank or credit union you opt for is FDIC or NCUA insured, guaranteeing protection for your deposits up to the federally set limit per depositor, per ownership category.
Reason for Saving
Consider your purpose for saving money to select the ideal account and bank. If you need easy access to your savings for emergencies, it's smart to open an account at the same bank as your checking account. If you're saving for a goal, like a car or a home, look for an account with a high APY to help you save faster.
When a Savings Account is Out of Reach
Occasionally, banks may deny a new savings account application. This could be due to unpaid bank fees, a history of issuing bad checks, or unfavorable ChexSystems reports.
If your banking history causes problems, seek out banks that offer 'second-chance' accounts. These accounts, while not the same as savings accounts, come with standard checking account features like ATM access, bill pay, and mobile banking.
With persistent effort and the right information, you can overcome obstacles and start building your savings account.
The Final Word
Savings accounts serve as a safe haven for your money goals and emergencies. Take your time shopping around for the account that best fits your lifestyle and requirements, and reap the benefits of safeguarded savings.
- In the realm of personal-finance, considering a high-yield savings account offered by the banking-and-insurance industry can significantly contribute to your long-term financial growth, given competitive APY and low or zero maintenance fees.
- As the industry evolves, individuals increasingly have the option to opt for online savings accounts, catering to tech-savvy individuals who prefer digital banking platforms and potentially enjoy higher APYs and lower fees compared to traditional brick-and-mortar banks.
