Choose the best savings account for you: 7 things to consider

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Your savings are the foundation of your financial plan. That's why it's so important to choose the right savings account. You want one that’s secure and earns a return without much effort. Today's top savings accounts often earn a decent return, making it easier to reach your money goals faster.

Here’s what to look for when choosing your first (or next) savings account.

1. Interest rates

If earning a sizable return on your savings is a priority, you’ll likely want to look beyond traditional savings accounts.

The higher the account’s interest rate, the faster your money will grow. Plus, if your savings don't grow at a rate higher than the inflation rate, you're effectively losing money. Choosing an account with a higher interest rate helps you earn more and stay ahead of inflation.

Savings accounts offering competitive interest rates include high-yield savings accounts, money market accounts, and certificates of deposit (CD).

High-yield savings accounts offer higher interest rates than traditional savings accounts. These accounts also provide easy access to your money, allowing you to make deposits and withdrawals.

Money market accounts also earn a higher interest rate. However, these accounts may come with check-writing privileges and a limited number of monthly transactions. Money market accounts often require a higher minimum balance compared to high-yield accounts.

CDs offer fixed interest rates for a specific term, ranging from a few months to several years. These accounts may have higher interest rates than high-yield and money market accounts. But there’s a catch: CDs require you to commit your money for the entire term, and withdrawing before the term is up can result in penalties.

2. Fees & charges

Added fees and other charges can affect the growth of your savings. Some banks will charge a fee to keep your account active, while others will charge based on specific transactions.

“Some banks may charge monthly maintenance fees, transaction fees, or require a minimum balance to avoid fees. Avoiding or minimizing these fees will help you keep more of your savings,” says Alec Kellzi, certified public accountant and founder of the Kellzi Group.

Common bank fees include:

• Maintenance fees charged to keep your account open
• Transaction fees charged for excessive or specific transactions, such as ATM withdrawals or transfers
• Minimum balance requirements charged if your account dips below a minimum amount
• Overdraft fees charged if you withdraw more than your account balance

Some savings accounts may charge for services like paper statements, account closure, or wire transfers.

The best way to avoid fees altogether is to use a fee-free account. Some banks will waive fees if you complete a certain amount of monthly transactions or enroll in direct deposit.

3. Minimum balance requirements

Many financial institutions require a minimum deposit to open a savings account.

You may need to maintain a set daily balance for some accounts to earn the maximum interest rate. Or you may need to meet the minimum balance requirements to waive certain fees. You may also face penalties if your balance falls below the minimum.

Sometimes, an account with a minimum balance is worth it if it comes with higher interest rates. Just make sure you can maintain the minimum.

In other cases, it may make more sense (and peace of mind) to stick with a savings account that doesn’t have this requirement.

These accounts are not the best place to store your emergency savings, as you’ll want access to your money if something happens.

4. Accessibility & convenience

How often do you access your account? Will you need to withdraw cash quickly, or can you wait a couple of days for a transfer to go through?

“Consider how easy it is to access your funds. Some accounts might limit the number of withdrawals or transfers you can make each month, while others may offer ATM access or check-writing capabilities,” says Doug Carey, chartered financial analyst and founder of WealthTrace.

Banks with physical branches and ATM access make accessing your account easier, depositing or withdrawing funds, and getting in-person help.

If that’s less of a priority, consider an online bank. These banks often have lower overhead expenses than brick-and-mortar banks. Because of this, they may offer competitive interest rates.

Check if the bank offers an accessible online platform or mobile app. This makes it possible to remotely check your balance, transfer funds, pay bills, or deposit checks. Easy access to these services can save you time and make your life easier.

“A user-friendly interface and mobile app can make managing your savings more convenient,” Carey says.

If you already have a checking or other account with a specific bank, opening an account with the same institution may be convenient. Banking in one place makes it easier to manage your finances and transfer money between accounts.

5. Customer service & reputation

The financial institution you choose to do business with should be reliable and have a track record of treating customers well.

A reputable bank should have robust security measures to reduce the risk of fraud or unauthorized access to your account.

It should also be transparent about your account's fees, terms, and conditions. Look at some of the customer reviews of the bank. Positive reviews and high customer ratings are a good sign you’ll have a more positive banking experience.

“A well-established and trustworthy bank can provide peace of mind for your savings. Good customer service is [also] crucial, especially if you encounter issues or have questions about your account,” says Carey.

6. FDIC insurance

The Federal Deposit Insurance Corporation (FDIC) provides coverage for up to $250,000 per person per account.

This insurance minimizes the risk of losing your funds due to bank failures or unforeseen circumstances. Even if your bank suddenly closes its doors, your money is protected.

Most banks in the United States have FDIC insurance, but confirming that the bank you choose carries FDIC insurance is still important. You can often find this information on the bank’s website.

If you open an account with a credit union, you get the same level of protection through the National Credit Union Administration (NCUA).

7. Bonus features

Some banks come with added perks that can sweeten the deal of opening an account.

“Look for additional features that align with your financial goals. Some accounts offer automatic transfers to boost savings, goal-tracking tools to monitor progress, or rewards programs that incentivize regular savings,” says Kellzi.

Common features include:

• Automatic savings tools like automatic transfers from your checking account to your savings account or round-up programs that save the spare change from your transactions
• Budgeting tools that help you monitor your spending, set financial goals, and track your progress.
• Educational resources, like articles, webinars, or workshops, designed to help you improve your financial knowledge.
• Welcome bonuses after you’ve had an open account for several days.

The bottom line

Identifying the best savings account comes down to your goals. A traditional savings account could be an ideal starting point if you’re looking for somewhere to store your emergency fund. Upgrading to a high-yield savings account or money market account to earn more interest could be smart as the balance grows.

“Some banks offer specialized savings accounts for specific purposes like education, healthcare, or buying a home. These accounts may have unique features and advantages worth exploring,” says Carey.

Choosing the best savings account doesn’t have to be overwhelming. Consider these factors when exploring your options, and compare different accounts to make the right choice.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.