5 Tips for Choosing the Best Savings Account

A little planning and research can help you get the most bang for those bucks you plan to save.
6/17/19 | By Robin Kavanagh
Woman saving money in a piggy bank

FinanceBuzz is reader-supported. We may receive compensation when you click links to products or services mentioned in this story. The opinions and recommendations are the author's own and have not been reviewed, endorsed, or approved by any of these entities. Learn more about how we make money.

Whether you have your eyes set on buying your first home or want to build a safety net for when the unexpected happens, chances are you’ll need a savings account at some point in your life.

Savings accounts are designed to give you a safe place to store and grow your money until you’re ready to use it. They’re a popular option for achieving both short- and long-term financial goals, and these days, Americans are making saving a priority. In fact, the value of personal savings in the U.S. topped $1.05 trillion in 2018, after having been at $384.4 billion just the year before.

Here’s a look at what to consider when looking for a savings account and some tips for making the decision that’s right for you.

What do you need in a savings account?

Before you begin looking for a savings account, take some time to evaluate your needs. For many, a savings account with a high APY (annual percentage yield, or interest rate) may be a top priority, since it allows you to earn more money on your savings.

Convenience may also be important to you. Having your checking and savings account with the same bank can make it easy and fast to transfer funds between the two. Being able to have a percentage of your paycheck diverted or have the change from a purchase automatically placed into a savings account are also convenient ways to build your balance. The question is, how important are these options to your situation?

Also consider how easily you want to be able to access your saved money. If you feel you’re going to be tempted to dip into your savings before you reach your goals, looking for an account that’s intentionally inconvenient may actually benefit you. For example, if it takes a few days to transfer money from your savings to your checking account, you could have time to rethink that big purchase and make sure you really want to spend your savings.

However, if you’re saving for short-term expenses and will need to access your money regularly, choosing an account with quick electronic transfers may be a good choice. Keep in mind that federal law limits the number of savings account withdrawals to six per month.

5 tips for finding the best savings account for your needs

Now that you have a good idea of what you’re looking for in a savings account, your next move is to shop around for the right one. There are many options available when you’re looking to save your money. Here are five tips to get you started.

1. Think outside the box

When looking to open a savings account, your first thought may be to visit a major bank or go with the bank where you have your checking account. This can be a great choice, but there are additional options to consider.

Online banks have a lot to offer savers, such as higher interest rates and no or low minimum balances and fees. You can also easily manage most online bank accounts from your phone or tablet 24/7.

“In addition to convenience, you usually find the best high-yield savings accounts at online banks, since their overhead is lower,” says Robert Farrington, founder of The College Investor. “They then pass that savings on to you in the form of higher interest on your money!”

Credit unions and community banks may also offer perks similar to online banks in addition to putting your money to good use. Both often make investments in their regions to help support small businesses and the local economy. Plus, credit unions are owned and operated by their own members, which some may find more appealing than a traditional bank.

2. Comparison shop

Not every bank offers the same rates, fees, or ease of access to your money. Take some time to list out the key factors you need in a savings account. Then see what each bank offers before making any decisions.

“You want a savings account that has a high yield,” says Farrington. “Most savings accounts offered out there have very little to no yield and are not much more than a place to park money. But some pay better. You want to look for a bank that also fits your lifestyle. That's why most people these days opt for banks that offer online banking.”

APY can vary widely from bank to bank, as can the timeframe the interest is compounded (the more often it compounds, the faster your money grows). Some banks require you to maintain a high balance in your account; some have no balance stipulations. Many offer easy access to your account, with online and app options; some don’t. Make sure you know which banks offer the things that are important to you.

3. Read the fine print

As with most financial products, savings accounts come with terms and conditions. These are important to understand before opening an account so you can get a sense of whether or not it will work for your goals.

Read through any terms and conditions materials or ask a customer service representative about:

  • Fees associated with the account (including transaction, maintenance, withdrawal, and ATM fees)
  • Requirements for minimum balances and deposits over what timeframe
  • Limitations on deposits and withdrawals
  • Types of APY applied to the account (e.g., introductory, variable, fixed)
  • How often interest is compounded

4. Check your eligibility

To open a savings account, most banks require you to provide some form of identification and a bill with an address on it. Accepted documents often include a passport; driver’s license; military or government identification; Social Security card; birth certificate; or utility, credit card bill, or bank statement.

Credit unions usually have additional eligibility criteria for membership, and you must be a member to open an account. These criteria usually involve some kind of association with the credit union, such as living in a local community, donating to a specific cause, or working in a specific industry.

5. Ask about technology

Many banks offer automatic and online services that can make adding to and managing your savings account easy. Look to see if there are options to have money added to your account with each paycheck or purchase. A bank may also have automatic alert options for when your account falls below a certain amount.

In addition, see if you can manage your savings account using a website or app. Making mobile deposits is a convenient way to add to your savings, so see if that’s an option as well.

It’s important to remember that not all savings accounts are created equal. Choosing one that will work for you and your financial goals takes some time and research. But the payoff can be well worth the effort.

Advertising Policy

FinanceBuzz.com is an independent, advertising-supported website. Some of the offers that appear on this page are from third party advertisers from which FinanceBuzz.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear).

FinanceBuzz.com does not include all financial or credit offers that might be available to consumers in the marketplace. FinanceBuzz.com does not include all companies or all available products.

FinanceBuzz has partnered with CardRatings for our coverage of credit card products. FinanceBuzz and CardRatings may receive a commission from card issuers.

Editorial Disclaimer

The editorial content on this page is not provided by any of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone.