Five Things You Should Know Before Opening a Savings Account

by Shannon on May 23, 2011

The following is a guest post by Jenney Roberts:

All of us open a savings account at some time in our life. With a savings account, you can save your hard-earned money for future use. You can also withdraw the money from the savings account in order to consolidate debt, meet your emergency expenses, or for other purposes. So if you are planning to save dollars, it’s important you know a few things before going to the bank.

The 5 things you should know before opening a savings account are given below:

  1. Interest rate: When you are thinking to open a savings account in a bank, the first thing that comes into mind is the interest rate. So, if you have a lot of debt and you’re planning to get debt free faster, then you should opt for high interest savings account. It will help you earn more interest on your savings; you can then use this money to consolidate debt faster. However, you should know that the interest rate on your savings account changes frequently. You may also know that fees and benefits change along with interest rates.
  2. Annual percentage yield (APY): You can calculate how much a deposit earns you through APY. It’s the yield your deposit will earn throughout the year. Your job is to find the highest APY so that you can get highest amount on your returns.
  3. Minimum deposit: This is the minimum amount that you have to pay to the bank for opening a savings account. The banks may ask you to make a higher minimum deposit for an account with higher APY. Some banks might waive the minimum deposit requirement based on the amount of money you keep in the savings account.
  4. Minimum balance: You need to keep a minimum amount of money in your savings account at all times or you’ll be required to pay some fees. Therefore, check the minimum balance that you have to maintain in the savings account.
  5. Accessibility: You must also consider accessibility while looking for savings accounts. If you want to make bank transactions on odd hours or holidays, then you can opt for an online bank. But if you only plan to maintain and deposit money, then you may opt for a land-based bank, open a passbook savings account and avoid using an ATM to withdraw cash.

Finally, you may opt for multiple savings accounts as you can save money for different goals – vacation, Christmas, and taxes. But you need to manage your accounts well and control over spending.

Contributed By:

Jenney Roberts is a writer for various finance related Communities including Debt Consolidation Care. She is a financial writer by profession and has specialization in dealing with financial problems and its solutions.  She is well equipped to write articles on debt consolidation, savings, planning, frugality, debt settlement etc.

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