A savings account should not be thought of as simply a place to store your cash. Consider it a method of letting your money grow. To achieve this, you will need to shop around a bit and place your money in a financial institution where the interest rate is highest. Additionally, make sure you inquire about any fees the bank may impose. Some banks, for example, require account holders to maintain a minimum balance to avoid incurring fees.
With so many choices available, it may be difficult to decide on which savings account is best. If you already have a checking account established with a financial institution, this might be a great place to start. When you have both a checking and savings account located at the same bank, you might receive some additional benefits. For example, if you were to overdraft your checking account for any reason, you can authorize the financial institution to transfer the difference from your savings to avoid costly fees or a bounced check.
Another benefit to having a checking and savings account at the same location is that it may be easier to transfer money back and forth. For example, if you are paid weekly wages from your employer, you may be able to set up an automatic transfer of funds. Some people find that this is a simple method of saving money. If you find that your checking account balance is running low, you can easily transfer some cash back to it. Some banks limit the amount of transfers you can request each month, however.
A local bank is a convenient place for you to establish a savings account. The interest rate is not always the best, however. In some cases, an online bank allows you to earn more money over time. Interest rates are usually higher because the financial institution's overhead may be lower. The money the bank saves is then passed on to account holders in the form of a higher return.
You should also consider the amount of money you are planning to deposit into a savings account. Some banks will not let you open one unless you meet the minimum deposit. Additionally, if you fail to maintain that minimum, fees can be assessed.
If your balance is too low, then you may end up paying out more money than you are earning in interest. For this reason, it is wise to select a savings account that does not charge its customers a fee. Otherwise, choose one with a low minimum balance that you are able to maintain.