Savings Accounts Summary & Tips to Avoid Fees
Best Savings Accounts
|Popular Direct||Savings||Best High-Yield|
|Incredible Bank||Incredible Savings||Best High-Yield|
|SalemFive Direct||eOne Savings||Best High-Yield|
|Ally Bank||Online Savings Account||Most Consistent Rate|
|Capital One 360||360 Savings||Most Consistent Rate|
|American Express Bank||Personal Savings||Most Consistent Rate|
|Radius Bank||High-Yield Savings||Low-Fee|
|FNBO Direct||Online Savings||Low-Fee|
|Capital One 360||360 Savings||Low-Fee|
Best Money Market Accounts
|Capital One 360||Money Market Account|
|Ally Bank||Money Market Account|
|DimeDirect||Money Market Account|
Different Types Of Savings Accounts: Tips To Save and Not Lose
An online savings account can be a great way to stash away your cash and earn interest. It’s certainly a better option than putting your extra money in a buried coffee can in the front yard or its bank equivalent, the interest-free checking account.
Tip: If you've never owned a savings account, you should read savings accounts basics to learn all about the different types and rates.Many people do not realize that certain types of savings accounts can end up costing you money while earning a negligible interest rate. The associated fees could more than cancel out the money that you’re going to earn. So, your balance could actually get smaller with each passing month. A coffee can isn’t looking too bad now.
When opening a savings account, there are several little tricks banks can use to keep you from noticing discrepancies. This is a type of deposit account can be a virtually risk-free place to sock away cash until you figure out what else to do with it. But, you need to make sure you’re not going to get blindsided by hidden fees or other costs.
1. Look For A Savings Account With No Minimum Balance
One of the most common requirements to waive a costly monthly account service fee is the minimum balance. Many banks don’t point out that if you don’t meet the minimum threshold, your savings account will just be a drain on you every month.
Three of the major national banks need at least a $300 balance, while Citi requires a $500 balance to avoid fees. This can be sidestepped by also taking out a checking account at the same institution and linking the accounts. But it’s usually more advantageous to your banking at more than just one institution. Instead, if you want to start small, it makes sense to look at different savings accounts with banks that don't require a minimum balance.
2. Different Savings Accounts Have Different Withdrawal Limits
You have the best of intentions to build larger savings, but we all know reality creeps in when you’re not expecting it. There may be times when you'll have to access those funds for urgent matters. It could be once a month or several times a month.
What you might not have read in the fine print is that too many withdrawals in a month can cost you. It is federal law for banks to limit withdrawals to a maximum of six per month for savings accounts.
Banks could charge an excess withdrawal fee for each withdrawal after reaching the limit. Some banks will start charging after three or four withdrawals per month. If these excess withdrawals become frequent, the bank could automatically convert your savings account to a checking account or close your account entirely.
3. Your Savings Account Might Be Paying For Overdraft “Protection”
Overdraft fees are big business for banks. According to the Consumer Financial Protection Bureau, 61 percent of bank's profits associated with checking accounts come from overdraft fees. The banks, in turn, often offer a way for you to use your savings accounts to "protect" you from these fees. But the reality is they don't complete protect you, and only lessen the burn.
The way overdraft protection works by linking your savings account to your checking, and will automatically transfer funds to cover should you accidentally overdraft your checking. Sounds like a nice enough feature, and it makes sense. After all, you had the money -- just not in the right account. Anything to avoid that pricey $35 overdraft fee.
The problem is, this service often isn’t free. You’re being protected from overdraft, to be sure, but you’re still paying something for the service. Overdraft transfer fees cost about one-third of your typical overdraft fee. So while you are paying less than normal, you're still being charged -- making this one important feature. This is one feature to inquire about when evaluating your top savings account options.
4. Only Link Your Different Accounts If You Want To
If you don’t hit the minimum balances, some institutions will charge you if you don’t have another account at the same bank, like a checking account. This can limit your options when it comes to diversifying your banking.
Try to find banks that don’t require you to have multiple accounts to avoid paying monthly “maintenance fees” (AKA what they charge you because they feel like it.) Again, those fees can, and usually do, far exceed the monetary benefit you’ll get from a savings account.
5. Your Great Savings Account Rate Might Not Be Around For Long
You might be willing to put up with the occasional fee if you have a big chunk of change in your savings account and that tasty interest rate makes it worth your while. However, that interest rate you signed up for might not be the one you’re getting a year, six months, or even three months down the road. And then, your account choice might not look like as nearly a good of choice anymore.
This is commonly called a teaser rate or an introductory rate, and the difference between what you get going in and what it changes to can be drastic, with your interest payments at times being cut nearly in half.
To be sure, a lot of banks won’t be completely forthright about how much you’ll be charged for certain services. If you’re thinking about banking somewhere, read the fine print to ensure you’re getting the best rates for your savings account.
Or better yet, talk to somebody. Describe exactly what you’re looking for, exactly what you’re planning on depositing, and exactly how much that will cost you. If it doesn’t work out for your situation, don’t take it. But if it does, then congratulations, you’ve found a safe place to put your money that will only grow in value with time.
Do you know of an online savings account that’s worth it, but didn’t make our list? If so, we want to know why you think we missed the mark. Let us know in the comments below.
If you’re looking for more specific answers to your questions about savings accounts, check out our learning center. It’s chock full of great advice from industry experts in personal finance, business, and more.
If you’re tired of reading, our personalized quiz will do the hard work and find the right bank account for you.