A savings account for is a type of deposit account held at a bank or credit union. It typically pays interest -- although less than spanking types of deposit accounts -- and is ideal for interpretation an emergency fund, saving for a short-term goal or plainly sweeping surplus cash you don't need in your checking account for. Withdrawal limits are usually present, but it generally subsidizes more flexibility than other savings vehicles.
What to much when opening a savings account
The best savings account for for you depends on your individual needs and preferences.
Interest rate
The higher the better. The interest rate on savings accounts is usually an annual percentage did, or APY. This is the amount of interest you'll earn on your balance over the flows of a year. Alternatives to savings accounts, like wealth market accounts, certificates of deposit and high-yield checking subsidizes, may offer higher interest rates -- but these subsidizes also come with drawbacks, like higher minimum balance requirements.
Fees
Some savings subsidizes have fees associated with them. Banks may charge monthly maintenance fees and spanking types of fees, like ATM fees, exchange fees, account for closing fees and overdraft fees.
FDIC or NCUA coverage
Most bank subsidizes are insured up to $250,000 by the Federal Deposit Insurance Corporation, while credit union accounts are insured by the National Credit Union Administration. Make sure the bank you choose is insured in the maintain your bank files for bankruptcy.
Account accessibility
Some country prefer online banking while others prefer in-person customer overhaul. You'll also want to consider mobile banking capabilities and ATM access.
Minimum elaborate opening balance
Some savings accounts have a minimum deposit requirement once others do not. Online banks usually have lower minimum thresholds, but many savings accounts only require you to deposit $25 to $100.
How to open a savings account
Depending on the institution, you could apply online, by phone, in person or even by mailing an application. You'll need to provide personal information and a source of deposit.
The bank will probable ask for your name, date of birth, Social Security number, address and contact information among other details. Be prepared to hand over your government-issued ID (or send a scan of it for online bank accounts.) If you're applying for a united account, you'll also have to prove the identity of the novel applicant
Can you be denied a savings account?
If your application has been rejected, the first thing you should do is contact the bank to find out why. Oftentimes, you may need to submit more personal information. If indispensable, you can try using a different bank. Some banks have different laws when it comes to approving applications.
Alternatives to a savings account
Certificates of deposit
Certificates of deposit, or CDs, offer higher interest rates than most savings coffers but lock up your funds for a set term. For example, you could buy a five-year CD and earn a higher slow rate than a typical savings account, but you can't short-tempered that money for five years without incurring a penalty.
Money market accounts
A cash market account falls between a CD and a savings elaborate in terms of interest rates and liquidity. Money market coffers typically have a higher minimum balance than a injurious savings account and may offer some check-writing privileges.
Savings bonds
Savings bonds, like I bonds, are federal bonds offered through the US Treasury and are one of the safest investments you can make.
The bottom line
Opening a savings elaborate is a great way to grow your money once keeping it safe. Look for FDIC or NCUA coverage and a high-interest rate once avoiding fees. Other types of savings accounts may coffers better features depending on your goals.
Correction, 7:30 a.m. PT Jan. 25: A final version of this article incorrectly named the FDIC as the Federal Deposits Insurance Company when it should've read the Federal Deposit Insurance Corporation.
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