So you’ve heard all about how important it is to save money. You’ve created a budget that allows you to set aside some of your income every pay period. You even do what you can to trim costs and to avoid making unnecessary purchases. Those are all good things. Keep doing them! Now the time has finally come to decide where to keep all that money you are actively saving. The old timers might have stuffed it under a mattress or put it in a coffee can in the kitchen. These methods are not exactly good for keeping your money safe or earning interest, though. It’s time to take the bull by the horns and open up your very own savings account.
This can be a little tricky, as there are more options today than there have ever been before. We have put together some helpful information to assist you in finding the best type of savings account and the best financial institution to trust with your precious savings dollars.
Don’t be Afraid to Compare and Contrast
As we mentioned, there are lots of options for people who are shopping around to open up a new savings account. Maybe you’ve been doing with the same bank for years, and you feel comfortable with that branch. That doesn’t mean you have to lock yourself into a subpar savings account for the sake of being a loyal customer. Every bank offers different rates on their standard savings accounts. You might find that your local bank offers just .01 percent interest, while another bank a little further from your home offers 1 percent. The obvious choice would be to go with the bank you may not be familiar with, but that is willing to grow your saved money at a faster rate. Take time and look into all of your options and several financial institutions before making your final decision.
Don’t Write off Online Banks
These days, we are seeing online banks that offer much higher rates than traditional, neighborhood branches. Some folks are concerned about security and safety when dealing with online banks. Make sure that you do your homework on any online bank, and choose one that is insured through FDIC. That gives your money the same kind of protection that it would get from any traditional brick-and-mortar bank.
Keep Savings Liquid
When you put your savings into a savings account or money market account that allows withdrawals, you get the kind of flexibility that you cannot get from a certificate of deposit (CD.) A CD has requirements for you to get locked into a rate for a period of time that can range from just a few months to several years. Being locked in like that is not always a good thing when the financial environment is conducive to rising interest rates, like it is right now. There is something to be said for diversifying your savings, and including a CD in your plans may be a good idea. However, as you are first getting started, it is better to use a traditional savings account that will allow you to keep your assets as liquid as possible for the foreseeable future.
Keep up the efforts to learn more about saving money and to put what you learn into action. Take your time and consider some of the information we have shared with you today. That way, you will be more prepared and able to ultimately choose the type of savings account that is right for your needs, and the right bank to help you grow your money over the years.