Saving money can be difficult these days. Despite our best efforts to consistently put money away, many of us see minimal returns when we open our bank statements. We started to question whether it was worth it.
This is demoralizing. When you sacrifice to save, you want your money to work for you actively. The good news is that you can choose the right budget car based on your needs. Accounts offer features that optimize growth potential.
This article highlights five beneficial savings account features to consider. Whether getting a competitive interest rate, avoiding fees, or convenient access to cash, having the right components can make it easier to reach your savings goals.
Read on for helpful tips on choosing an account to grow your savings!
Five significant features of a savings account
Opening a savings account is the first step to securing your financial future. However, not all accounts are the same. The key is to find a product with features that match your goals.
Here are the top 5 features to look out for:
1. Get a better interest rate
This is the most direct way to use your funds. Higher interest rates compound over time by earning interest. Even an extra 0.5% can add tens of thousands of dollars to your account over decades of diligent saving.
Focus your search on online banks, where you can find savings of up to 2% or more. By comparison, the average interest rate at brick-and-mortar banks is just 0.06%—barely enough to buy an extra cup of coffee every year! Online banking offers as much liquidity and better tools through a powerful app.
Bottom line: Don't settle for a paltry price that won't do you any good. Find the highest interest rate within your risk tolerance so that a small saving today becomes a more significant balance tomorrow.
2. Minimum balance requirements for transfers
Some banks require you to deposit hundreds or even thousands to open an account. Not only is this unrealistic from the start, but going below the minimum means losing interest income and paying penalties.
Instead, look for banks that eliminate or reduce barriers to opening an account. Many online options no longer offer minimum amounts. This allows you to start small and deposit on a schedule.
The bottom line is that you shouldn't allow restrictive minimums to limit your earning potential or put you at a savings disadvantage.
3. Get free cash
Unlimited ATM fee refunds give you penalty-free access to cash, helping you avoid dipping into your savings on transactions. This is handy when you're away from the branch, such as on a domestic road trip or an overseas adventure.
Be aware of debit card usage habits that can lead to frequent account fees and reduce your profits. But overall, flexible and affordable access to cash means accessing accounts less frequently.
4. Prevent overdraft
Accidental overdrafts are standard and can incur penalties and interest, wiping out savings gains. Link your checking and savings accounts to provide an affordable overdraft cushion for life's unexpected expenses.
Please be aware of the frequency of transfers between accounts, as fees may apply after 6 pm each month. This feature prevents painful penalties so you can stick to your savings goals.
5. Manage it your way
Robust online banking and mobile apps let you check your balance, transfer funds and set account reminders 24/7. This supports the convenience and control of managing savings from anywhere.
For example, look for apps that allow customized alerts for low balances or large transactions. Automatic payday transfers also help you save money easily. Using a budgeting tool can also help track spending habits.
Bottom line: Choose a provider that always provides access, visibility, automation and control of your funds. This allows you to grow your savings proactively based on your circumstances.
Diploma
Building savings is intelligent financial planning, but choosing less powerful accounts can result in lost returns over time. The good news is that research can uncover ways to optimize your growth potential. The top priority should be competitive interest rates, the lowest fees, and having funds available when needed.
Online banks often offer the best interest rates and lower first deposit requirements and are worth looking into. However, before opening an account anywhere, ensure you know all the guidelines. Helpful automation tools and easy-to-use mobile apps can also encourage consistent posts.
Remember that even a small percentage of higher interest rates can significantly increase over the years. Small starting advantages can add tens of thousands of dollars in additional revenue.
Become your best financial advisor by comparing accounts that match your growth goals. You can quickly achieve your goals with the right savings vehicle with great rates and features. Cheers to a future where your money will work for you just as hard as you worked to make it!
Frequently Asked Questions
Q: What is the average interest rate on a savings account?
Answer. The national average annual interest rate for physical banks in 2022 is 0.06%, and the annual interest rate for online banks is 0.50%. Prices vary, though, so shop around.
Q: Should I choose a big or small bank for saving?
Answer. Large banks offer more ATMs and branches but lower interest rates. Online and smaller banks offer higher rates but have fewer physical access points. Assess trade-offs.
Q: How often should I check my savings account?
A: Check your account at least every six months. Or you could do it more often if you notice a drop in interest rates. This ensures you still have the best deal to maximize your savings growth.
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