Which savings account will earn you the most money?
Savings accounts are a type of bank account that allows you to deposit money and earn interest over time. They are a safe and convenient way to save for your short-term or long-term goals, such as an emergency fund, a vacation, or a down payment for a house. However, not all savings accounts are created equal. Some offer higher interest rates, lower fees, and better features than others. So, which savings account will earn you the most money? Here are some factors to consider:
The interest rate is the percentage of your balance that the bank pays you every year. The higher the interest rate, the more money you will earn from your savings account. However, interest rates can vary widely among different banks and types of savings accounts. For example, according to Bankrate, the average interest rate for a traditional savings account in October 2023 was 0.06%, while the average interest rate for a high-yield savings account was 4.81%. That means that if you deposited $10,000 in a traditional savings account, you would earn only $6 in a year, while if you deposited the same amount in a high-yield savings account, you would earn $481 in a year.
High-yield savings accounts are usually only available online. They offer higher interest rates than traditional savings accounts because they have lower overhead costs than brick-and-mortar banks. However, they may also have higher minimum deposit requirements or monthly maintenance fees than traditional savings accounts. Therefore, you should compare the interest rates and fees of different high-yield savings accounts before opening one.
Some of the best high-yield savings accounts for October 2023 are:
- Popular Direct Select Savings account: This account offers a 5.25% APY with a $100 minimum deposit and no monthly fee. It also has mobile deposit features and is FDIC insured.
- Bread Savings account: This account also pays a 5.15% APY with a $100 minimum deposit and no monthly fee. It also has mobile deposit features and is FDIC insured.
Fees are the charges that a bank imposes on your savings account for various services or transactions. Some common fees are:
- Monthly maintenance fee: This is a fee that a bank charges you every month for keeping your account open. Some banks waive this fee if you maintain a certain balance or meet other criteria.
- Excess withdrawal fee: This is a fee that a bank charges you if you exceed the limit of withdrawals or transfers from your savings account in a month. The limit is usually six per month, as mandated by the Federal Reserve Board’s Regulation D. Some banks may charge you this fee even if you withdraw or transfer money from an ATM or online.
- Early closure fee: This is a fee that a bank charges you if you close your account within a certain period of time after opening it. The period can range from three months to one year, depending on the bank.
- Paper statement fee: This is a fee that a bank charges you if you request a paper copy of your account statement instead of viewing it online.
Fees can reduce the amount of money you earn from your savings account. Therefore, you should look for a savings account that has low or no fees, or that waives them under certain conditions.
Withdrawal limits are the restrictions that the bank places on how much money you can withdraw or transfer from your savings account in a given time period. As mentioned above, the Federal Reserve Board’s Regulation D limits you to six withdrawals or transfers per month from your savings account. However, some banks may impose additional limits, such as daily or weekly limits, on top of this regulation.
Withdrawal limits can affect your access to your money and your flexibility to use it as you need. If this isn’t an ideal situation you should look for a savings account that allows you to make unlimited withdrawals or transfers from certain channels, such as ATMs or online.
Customer service is the quality and availability of the bank’s support for your savings account. Customer service can include:
- Online banking: This is the ability to access and manage your savings account through the bank’s website or mobile app. Online banking can allow you to check your balance, view your transactions, make deposits, withdraw money, transfer funds, pay bills, and more.
- Phone banking: This is the ability to access and manage your savings account through the bank’s phone system or customer service representatives. Phone banking can allow you the same access to your funds as online banking.
- Branch banking: This is the ability to access and manage your savings account through the bank’s physical locations or staff. Branch banking is great for people wanting to go to a physical address and speak with someone in person about their money.
Customer service can affect your convenience and satisfaction with your savings account. Therefore, you should look for a savings account that has good and reliable customer service, especially if you prefer to interact with the bank through a certain channel.
Security is the protection and privacy of your savings account and your personal information. Security can include:
- FDIC insurance: This is the coverage that the Federal Deposit Insurance Corporation (FDIC) provides for your savings account in case the bank fails. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category. Most banks in the US are FDIC insured, but some online banks may not be. Therefore, you should check the FDIC status of the bank before opening a savings account with them.
- Encryption: This is the process of converting your data into a code that only authorized parties can access. Encryption can prevent hackers or thieves from stealing or tampering with your savings account and your personal information. Most banks use encryption to secure their online banking platforms, but some may use stronger or weaker encryption methods than others. Therefore, you should check the encryption level of the bank before opening a savings account with them.
- Authentication: This is the process of verifying your identity before allowing you to access or manage your savings account. Authentication can prevent unauthorized or fraudulent access to your savings account and your personal information. Most banks use authentication methods such as passwords, PINs, security questions, or biometrics to secure their online banking platforms, but some may use more or less authentication steps than others. Therefore, you should check the authentication methods of the bank before opening a savings account with them.
Security can affect your peace of mind and confidence with your savings account. Therefore, you should look for a savings account that has high and robust security measures, especially if you use online banking frequently.
Which savings account will earn you the most money?
Choosing the best savings account for your money can be a daunting task. As you consider the different factors you must choose within them what is important to you. Do you care what fees are charged or if you can only reach your bank through online access? This guideline can narrow down your options and find the savings account that suits your needs and preferences best.
By choosing the best savings account for your money, you can maximize your earnings, minimize your costs, and enjoy your savings journey.