With a savings account, you’re usually depositing money you want to leave there for an extended period of time. By placing your money in a savings account, you’re actually earning money because the bank will pay you interest on the amount in your account.
Like with checking accounts, banks may offer free savings accounts, but you need to make sure you understand what “free” really means. With some banks, the account is free only if you keep a minimum balance and if you drop below the minimum balance, your free “savings” account may actually end up costing you money.
Besides the cost of the account, there are some other important factors you need to consider when shopping around for a savings account:
Types of accounts offered
How many different types of savings accounts does the bank offer?
Monthly service fee
How much will the bank charge you to maintain your account? Do they offer ways and solutions to avoid fees, like auto transfers from your checking account?
What is the current interest rate on the account you’re thinking of opening? You might want to ask about the “Annual Percentage Yield,” which makes it a little bit easier to compare banks that compound their interest differently.
ATM cards and charges
Will your account come with an ATM card and is there a charge to withdraw money from your bank’s ATM? Also, what is the charge if you withdraw money from another bank’s ATM?
Will the bank impose a withdrawal limit on your account and, if so, what is the limit?
Availability of funds
How long after you make a deposit will your money be available to you?
For more information about managing your savings account, click here.