How to Choose the Best Savings Account

4 Min. Read

There are a lot of reasons people put off opening a savings account and saving money. You might relate to a few of these common excuses:

 

“I’ll start saving after I pay off my credit card debt.”

 

“I don’t have enough leftover to save after I pay my bills and living expenses.”

 

“I’m still young. I don’t need to worry about saving yet.”

 

Instead of putting off saving because of debt, expenses, or your age, think of it like this: “The sooner I start saving, the faster my money will grow.”

 

Here, we’re exploring the benefits of saving and how to choose the best savings account for your financial goals.

Advantages of Savings Accounts

Saving money is a solid step towards financial security, and a savings account is a smart choice to help you reach your short- and long-term savings goals. Here are some of the advantages of savings accounts and the top reasons to start saving today:

 

It’s simple to start. Creating a savings plan doesn’t have to be complex. You can get started saving small amounts from each paycheck. Even sacking away $5 per pay period can make a big impact on your ability to reach your financial goals.

 

Your funds are easily accessible. Savings accounts offer liquidity, which means you have easy access to your money when you need it. Other types of savings vehicles, like certificates of deposit (CDs), lock away your funds for a specified period and charge penalties for early withdrawal. With a savings account, you can withdraw your money without restrictions.

 

You earn compounding interest. One of the primary benefits of opening a savings account is the ability to earn interest on your deposits. The power of compounding interest (interest earned on both your initial principal balance and interest accumulated from previous periods) allows you to grow your savings faster.

 

Your money is protected. Unlike taking a chance on the stock market, a savings account offers you a low-risk way to earn money on your investment. Plus, your deposits are typically insured by the FDIC or NCUA, ensuring your money is safe and protected.

 

You’ll build an emergency fund. A savings account is an ideal tool for building an emergency fund or saving for short-term goals. With competitive interest rates and easy accessibility, these accounts are one of the best options for stowing away funds for a rainy day.

 

You can gain financial empowerment. It feels good to watch your balance grow in a savings account. Overcoming financial challenges by successfully saving money can provide a sense of accomplishment and inspire you to set and reach even more ambitious goals.

 

Are savings accounts worth it?

With the way interest rates can fluctuate, you might wonder, “Is a savings account even worth it?” The answer is usually a resounding “Yes!” Savings accounts provide a safe, reliable way to set aside money for short-term goals or an emergency fund. However, there are certain scenarios where a savings account isn’t the best solution.

 

Here are the potential drawbacks of a savings account for some savers:

• Not ideal for long-term growth. The interest you earn on a savings account is unlikely to outpace inflation or help you achieve long-term goals, like saving for retirement.
• Fluctuating interest rates. Unlike some other investment accounts, the interest rate on a savings account is variable. The financial institution can change the rate at any time.
• Possible withdrawal limits. Regulation D is a federal regulation limiting the number of monthly withdrawals and transfers you can make from a savings account. The regulation is intended to promote savings accounts for longer-term savings rather than frequent transactions.

 

Despite fluctuating interest rates in recent years, savings accounts still hold value. While the interest earned may not beat inflation, the security and accessibility of a savings account make it worthwhile for building an emergency fund or reaching short-term goals.

 

Which Savings Account is Right for Me?

The “best” savings account depends on your individual preferences and financial goals. Factors to consider include interest rates, fees, minimum balance requirements, transaction limits, and convenience of access. Here’s what to consider when researching the best savings accounts:

 

Interest Rate. Compare interest rates offered by different banks or credit unions and look for an account with the most competitive rate. The higher the interest rate, the faster your savings will grow.

 

Fees. Research and understand any fees associated with the account, such as monthly maintenance, minimum balance, or transaction fees. Remember that some of these fees may be waived if you meet certain conditions. Choosing an account with minimal fees will help you maximize your savings.

 

Minimum Balance Requirements. Some savings accounts require a minimum balance to avoid fees or to earn interest. Choose an account without a minimum balance requirement or a threshold that matches your financial situation.

 

Accessibility. Consider how easily you can access your money when you need it. Look for accounts that offer convenient ways to withdraw funds, such as visiting a branch, using mobile or online banking, or using an ATM.

 

Account Features. Consider the additional features the financial institution offers, such as online and mobile banking, linked accounts, and automatic transfers. These features can make it easier and more convenient for you to save consistently.

 

FDIC or NCUA Insurance. Make sure your savings account is federally insured by the FDIC (for banks) or NCUA (for credit unions). This protects your funds (up to certain limits) if the financial institution fails.

Plan for Your Future with Marine Credit Union

At Marine Credit Union, we’re here to help guide you through setting your personal savings goals. Get in touch with a Marine Credit Union representative today.

Get Started

 

Accessibility

No amount of money is too small to save. At Marine, you can get your savings underway with as little as a $5 initial deposit.

 

Control

Check your account balance and schedule transfers anytime, anywhere, with online banking or the Marine Mobile app.

 

Variety

Because all our members have different financial goals, we offer multiple types of savings accounts, each offering unique benefits.