Savings accounts pay modest interest on the money you deposit with a bank, credit union, or other financial company. Depositing funds is easy, and you can quickly access your cash whenever you need it. The fastest and most convenient way to open a savings account is online.
Set a goal
First decide how much you want to save. Then, set a time frame for when you want it completed. If you’re not accustomed to saving, start small and make it a habit. Then increase the amount you save incrementally.
Your bank or credit union limits the number of withdrawals you can make from your savings account each month, and they may charge fees unless you maintain a certain average monthly balance. So ask about these and other restrictions before opening an account.
While liquidity is a key benefit of a savings account, easy access to funds might tempt you to prematurely tap and spend what you’ve saved. If you regularly deplete your savings, you may need to cut your expenses or find a way to bring in more income.
Depending on how much you’ve saved, even a modest quarter-percent more in interest can yield hundreds more dollars a year. So shop around. Typically, credit unions have higher rates than brand-name banks. And online banks often pay higher interest than traditional banks. Even consider a Money Market Account – it’s just as safe as a savings account (both are FDIC insured) and usually earns higher interest than a regular savings account, but may have a higher minimum deposit and balance requirement.
On a tight budget? Ask your bank or credit union to transfer a fixed amount every month, or every pay period, to your savings account. Some financial companies even reward automatic deposits of as little as $25 a month by waving minimum balance requirement fees.
Divide and conque
Don’t keep savings in a checking account with a mental note that they’re savings. Instead, open a dedicated savings account—preferably in an institution other than the one you normally use. Out-of- sight/out-of-mind can help keep your savings secure.