How to Open a Savings Account — The Little Dollar
A savings account is simply an account you can put money into to set for savings goals. You receive interest on your money and have to follow various rules for withdrawals.
Simply put its an account to hold your money and make some money for letting the bank use your money. You get to have your money in safe FDIC insured account that is virtually available to you at all times.
When you have a savings account, you are shielding yourself to potential spending, I consider this lifestyle safety. You can enjoy the benefit of safety when you are using a savings account by placing your money in the account that typically only offers 6 withdrawals a month.
Another benefit you will enjoy with a savings account is the potential for growth in your funds. When you have a savings account, in theory you can grow it with interest. So, if you have $100 in your account and earn 1% you will have $101 by the end of the year.
When looking to open your account you will want to compare banks. Typically, you are searching for interest rates and fees within the account type and account minimums. Some accounts have $500 minimums with a $25 maintenance fee or some wild things while others are fee free savings accounts with no minimums.
The weird thing is banks make money off the money you deposit with them. By trading it in investments or loaning it out to mortgages or other loans. The bank makes their money, so if they charge you fees, they are getting even more money. And you are losing money.
When comparing your banks, you should look for these three things.
With most banks they offer interest rates somewhere around 0.05% on your money. If you have $100 in the account, you earn 5 cents a year. I suggest if you are looking to earn good interest on your accounts you find interest rates around 1–2% as most high yield accounts float around these rates.
When I got my high yield account, I started at 2.42% and now it’s as low as 1.87% (due to rate cuts in late 2019)
You should highly consider online savings accounts if you are looking for a good rate. The benefit of a high yield online saving account is the company has no brick and mortar so the company can transfer their savings to your account.
When you are opening a savings account, you are looking to present your Id card, and address. You need to present yourself to the bank so they can setup the account for you.
When you open your savings your account you need to fund it. When this happens, you will need to link an existing account, or setup direct deposit.
This is typically an easy task to do and if you have a few online apps for your bank account.
When you are looking to add funds to your account you can do so in a few various ways.
- Deposit Cash
- Deposit Checks
- Transfer between banks
- Direct deposit from paycheck
Alternatively, you can access your funds in various ways as well. Some accounts allow you to withdraw in certain rules.
- Withdraw cash
- Transfer to checking- sometimes you have to transfer checking then withdraw cash.
You may also be looking for some savings account alternatives.
Short term-based savings that can earn you a small based interest fee.
- Certificate of Deposit
- Money market accounts
- Credit Union accounts
- Peer to Peer lending services.
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Originally published at https://thelittledollar.com on November 6, 2019.
