Finances 101: Tips on Opening a Savings Account

tips on opening a savings account

Whether you’re opening your first savings account or you’ve had them in the past, knowing what to look for can help you maximize its benefits — and minimize or eliminate the costs. “Keeping separate checking and savings accounts not only makes it easier to track your success on the path to your financial goals,” says Mary Beth Storjohann, a certified financial planner in San Diego. “It helps you to stay organized and have a clear understanding of your excess or deficit spending each month.”

Savings Account Features

When you’re looking to open a savings account, having convenient ways to access your money can save you time and, in some cases, money. At a minimum, Storjohann recommends that you look for a savings account that lets you access it via your smart phone, make mobile deposits and link to your other accounts for transfers. If you plan to make numerous ATM withdrawals, make sure the bank has convenient ATM locations in your area; otherwise, you could find yourself nickeled and dimed each time you use another bank’s ATM.

Savings Account Insurance

When it comes to features, be sure the bank is insured through the Federal Deposit Insurance Corp. so your savings will be protected in case the bank fails, warns Storjohann. The FDIC covers the first $250,000 of your money at each bank in each account ownership category. These include single accounts, joint accounts, and certain retirement accounts. For example, if you have a savings account and a checking account in your name alone at the same bank, the $250,000 limit applies to the total of both accounts. But, if you have one savings account in your name only and one in both your name and your spouse’s name, they’re in two separate account categories, so the coverage applies separately.

Savings Account Fees

When you’re opening an account, look for one with few or no fees, such as minimum balance fees, maintenance fees or transaction fees. “At a minimum, people want to make sure the account doesn’t have any maintenance fees,” Storjohann says. “You don’t want to lose value on your funds due to fees chipping away on a monthly or annual basis.” When you’re looking for accounts, get a written list of all the potential fees, such as a fee for making too many withdrawals. “There shouldn’t be a high level of withdrawal transactions in a savings account if it’s being used to stock away funds,” Storjohann explains. “But for transparency purposes, people should be aware if their bank charges a fee for additional withdrawals above a certain limit.”

Interest Rates

Don’t forget about comparing the interest rates on your savings account. When your balance is small, the monthly interest might seem like a pittance, but as you build up your rainy day fund, getting a higher interest rate can add up. For example, if you’ve stashed away $10,000 in your rainy day fund, an extra 1 percent of interest adds $100 to your fund each year. As your balance increases, look for savings accounts that offer higher interest rates if you keep a higher minimum balance.