Not all savings accounts are created equal. To differentiate themselves from the competition, banks have gotten creative in terms of what they offer to draw consumers into opening a savings account. So how do you go about selecting the best savings account to meet your needs? Read on for a list of things to consider when you’re making your choice.
1. Fees and charges
When it comes to making the most of your money, it’s important to look at whether the savings account you’re considering has any fees associated with it. Are there fees for making withdrawals? How about monthly fees? If you plan on making regular withdrawals from your savings account, you’ll want to select one that doesn’t penalise you for withdrawals, so that you aren’t paying a fee every time you want to move money around.
If, on the other hand, you’re looking to simply deposit funds and leave them there for a while with no withdrawals, it can be beneficial to look for an account that waives the monthly fee when you maintain a minimum balance.
2. Interest rate
Interest rates can vary widely across savings accounts. With higher interest rate accounts, occasionally there will be more restrictions on how you can access your money and what you can do with it. It may be a trade-off that you’ll have to consider: do you value a higher return on your money, or the convenience of being able to access it easily, anytime?
A high interest savings account will also make your money work for you, without you having to put in any effort besides making sure you set money aside. The higher the savings account interest rate is, the more money you can make on your funds.
3. Term deposits
Term deposits offer a fixed interest rate that is generally slightly higher than your standard savings account. When considering a term deposit, however, make sure you won’t need short-term access to the funds; once the money is in, it generally can’t be touched until the term is up without incurring a penalty.
4. Accessibility of funds
Some banks may not have any access to physical branches where you live. High interest savings accounts often don’t offer card or ATM access, so it could make accessing your money when you need it difficult. If you regularly need to access funds from your savings, consider linking a transaction account to your savings account, and setting up internet banking access to ensure you can transfer funds easily.
5. Account restrictions
Some savings accounts offer lucrative interest rates, but place restrictions on what you can do with your account as a trade-off. For example, you may be limited to a set number of transactions each month, not be able to make any withdrawals at all, or need to maintain a minimum account balance to qualify for the bonus incentive. While this can work for some, it’s a deal-breaker for many others who need to withdraw funds regularly.
6. Savings offers & incentives
Many financial institutions offer incentives for moving your money over from another bank, or for opening a new type of account, such as promotional interest rates for a short period of time. These can be great to take advantage of, especially if you plan to move a large sum of money, as the interest can add up quickly.
Make sure you understand what you’re signing up for, however. When you read the fine print, you will sometimes see that you are required to leave a minimum balance in the account to be eligible for the promotional interest. Also, be sure to consider what you will do with your money after the promotional period ends.
While there is no one-size-fits-all solution to which savings account is right for you, by doing a bit of preparation to decide what is most important to you, you can make a more informed selection on which account will provide most benefit to you in the long run. Happy saving!
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