A savings account can be a good option if you’re looking for a place to keep — and grow — your money.
But how do you find a savings account that fits your needs? Whether you’re opening your first savings account or thinking about switching banks, there are some things you should be aware of, including interest rates, security, fees and more.
We’ll go over your options for where to open a savings account — and things to know before signing up.
Where can I open a savings account?
You can find most savings accounts through traditional banks, credit unions, online banks and fintech companies. Here’s a breakdown of what you can expect from each option.
When you’re ready to open a savings account, your first instinct may be to try a local bank or a bank where you already have a checking account.
- Benefits — If you prefer in-person customer service or visiting a branch, you may want to pick a brick-and-mortar bank.
- Downsides — Many traditional banks offer a low annual percentage yield, or APY, on your savings. You may see savings accounts offering interest rates as low as 0.01%. But it’s easy to find high-yield savings accounts instead. Just keep in mind that some banks might charge a fee if you don’t maintain a certain minimum balance.
Credit unions are nonprofit, member-owned organizations. Like banks, you can probably find one with a branch that’s located somewhere that’s convenient to you.
- Benefits — Credit unions may pass along profits to members, sometimes through higher savings account rates. You may also get more personalized customer service.
- Downsides — To join a credit union, you usually need to meet specific eligibility criteria, such as working for a specific employer or living in a certain area.
Online banks or fintech companies
Once you start looking for a savings account, you may notice a number of fintech companies — like Credit Karma* — offering high-yield savings accounts. There are also online banks that offer high-yield savings accounts, too.
- Benefits — These companies may offer higher interest rates on savings accounts than banks or credit unions. If you like banking online, you may also benefit from lower fees.
- Downsides — Not everyone feels comfortable banking without a branch nearby. Plus, some online banks or fintech companies may not offer some products — such as checking accounts and auto loans — you can find at banks or credit unions.
What to look for before opening a savings account
As you start comparing savings accounts, it’s easy to focus solely on interest rates. And while a savings account’s APY offering may be a selling point, you should review the company’s fine print for other account details too.
- Account restrictions — Before getting too excited about a new account, you’ll want to make sure you qualify. Some financial institutions, such as credit unions, may have eligibility requirements for membership.
- Annual percentage yield — This is the rate of return you earn on the money you have in a deposit account. You’ll also want to think about compound interest — which is when you earn interest on your principle amount plus any interest you’ve already accrued.
- Access to cash — If you’re considering an online bank without physical locations, make sure you know how to access your money. You may be able to link your savings account to a debit card, and some credit unions or online banks may reimburse you for ATM fees.
- Added benefits — Some companies offer sign-up bonuses or extra perks for banking with them. But before signing up, you’ll want to be clear on the complete rules and regulations.
- Minimum account balances — You’ll want to watch for minimum account balance fees. Some banks may charge you a monthly fee if you don’t keep a certain amount in your bank account. You may also need to meet a minimum balance requirement to earn a higher APY.
- Security — Feeling nervous about depositing your money? Make sure your funds are FDIC insured (or insured by the NCUA if it’s a credit union).
Opening a savings account can help you achieve your financial goals, whether it’s creating an emergency fund or padding your nest egg. Even putting aside small amounts of money on a regular basis can make a big difference.
If you’re trying to save more, there are a few other options to explore.
- Consider enrolling in automated deposits through your bank or employer.
- Explore getting a money market account or certificate of deposit.
- Contribute money for retirement to your employer-sponsored 401(k) or an IRA.
To stay on track, you’ll need some patience and consistency. You may rest easier knowing you can handle an unplanned expense — especially as you get closer to your savings goals.
*Banking services provided by MVB Bank, Inc. Member FDIC.