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How To Choose The Right Savings Account

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Wondering where to turn when it comes to opening a new savings account? Consider these items first.

A savings account is one of the safest ways to save money. There are a variety of savings accounts to help you in your financial planning. However, it can be challenging to decide which type is right for you because banks offer a wide range of options. To better help you choose, this article will provide you with what you need to know about the various types of savings accounts.

What Is a Savings Account?

To better choose the right savings account, it’s best to begin by understanding what a savings account is. A savings account is a type of account that banks, financial institutions, or credit unions offer that provides you with a secure location to store your money and earn compound interest. A savings account serves as a secure place to store money that isn’t being used for regular expenses. It allows you to deposit money and also withdraw money if you need to.

However, the majority of banks and financial institutions will give you compound interest on the remaining balance of your savings accounts. Every bank or financial institution has a unique way of providing compound interest, but it is typically a percentage of the amount in the account. Generally, the more money you have in your savings account, the more compound interest you are going to earn.

Types of Savings Accounts

Knowing the various types of savings accounts will help you distinguish between them when comparing their features, areas where you can access them, and their functions. This will help you select the best savings account for you. Here are different types of savings accounts with features that may help meet your savings needs.

Regular Savings Account

A regular savings account is one of the most common types of savings accounts, also referred to as “monthly savers” or “regular savers”. It is a bank account where you can keep your money while also earning interest. If you can consistently save money each month, regular savings accounts will work best for you. Money is deposited into a regular savings account once per month or as specified in the agreement. However, the interest rate can be lower compared to other types of saving accounts.  With a regular savings account, you can manage your account online, through mobile banking, over the phone, or at a branch location.

Money Market Accounts

Money market accounts are comparable to regular savings accounts, but they also have some features of checking accounts. These accounts, which are accessible through banks, credit unions, and online lenders, are normally interest-bearing and insured up to $250,000. If you want to save money but like the idea of having access to it at any time, you might find money market accounts useful. These accounts typically offer a higher annual percentage yield than regular savings accounts and pay interest based on the current market rates. In addition, you can write checks from it in exchange for maintaining a higher balance.

Certificates of Deposit

Time deposits, such as certificates of deposit (CDs), require you to commit to keeping your funds in the account for a predetermined length of time. Your savings accrue interest during that time, and you typically have the option to withdraw them or roll them over into a new CD when the CD matures. This distinguishes these accounts from other kinds of savings accounts because time is a factor.

Both conventional banks and online banks offer CDs. Online banks typically have better interest rates than traditional banks. The typical CD term ranges from 30 days to 60 months, with longer terms typically offering higher rates. If you want to earn competitive rates and won’t need to immediately access your savings, this is a good option for you.

Relationship Savings Accounts

You can open a relationship savings account if you also have a matching checking account. Depending on the type of coupled accounts you maintain, benefits could include waived monthly maintenance fees and higher interest rates. If you wish to maintain a larger balance to receive a higher yield, the relationship savings account could be ideal for you. It’s a great way to get started toward higher dividends since it usually has a low opening balance.

High-yield Savings Account

High-yield savings accounts are a type of account that offers a higher annual percentage yield than regular savings accounts. High-yield savings accounts are typically found at online banks, neobanks, and online credit unions. Along with better rates, online banks typically impose fewer or lower fees, such as monthly maintenance or excess withdrawal charges. This kind of savings account might be appealing if you feel more at ease managing your account online or through mobile banking than going to a branch. If you want to earn savings at a rate that is more competitive while lowering fees, high-yield savings accounts can be advantageous for you.

How To Choose a Savings Account

With the information available on various types of savings accounts, it is best to select the one that best suits your needs. Here are some key factors to take into account when selecting the best savings account to help you make your decision:

  • Decide on your spending preferences for the money you’re saving. Finding a savings account that enables you to set goals inside the account might be worthwhile if you’re saving for multiple objectives.

  • Take a look at interest rates. Different interest rates are available for various savings accounts. Choosing higher interest rates based on your needs will aid in the growth of your financial resources.

  • Think about the minimum balance requirements. Many savings accounts have minimum balance requirements, which are daily assessments of the least amount of money you must have in the account. If you fall below that amount, fees might apply.

  • Consider the accessibility and ease of use. It is not necessary to do all your banking in one location, and an online account might be the most practical. Examine the procedures for deposits, transfers, and withdrawals from the savings account.

Don’t stress too much if you’re having trouble choosing the right savings account. The chances of having a good account are high as long as you open one with a reputable bank that offers high-yield interest and no monthly fees. However, it’s always best to choose a savings account with features that meet your savings goals.

Finny the Finance Bot says…

What should I look for when I open a new savings account?

When you’re opening a new savings account, there are several factors to consider in order to ensure that you’re getting the best deal for your money. Here are some things to look for:

  1. Interest rate: Look for a savings account with a high interest rate, as this will help your money grow faster.
  2. Minimum balance requirements: Some savings accounts require you to keep a minimum balance in the account, so make sure you understand the requirements and can meet them.
  3. Fees: Look for a savings account with low or no fees, as these can eat into your interest earnings.
  4. Accessibility: Consider how easily you can access your money, such as through ATMs, online banking, or in-person visits to branches.
  5. Security: Make sure that the financial institution is FDIC insured, which means that your deposits are insured up to $250,000 in the event that the institution fails.
  6. Customer service: Consider the quality of customer service offered by the financial institution and whether it meets your needs.
  7. Bonus offers: Some savings accounts offer sign-up bonuses or other promotions, so look for these if they’re important to you.

By considering these factors, you can find a savings account that meets your specific needs and helps you save and grow your money effectively.

About the Author

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Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
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Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).