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Ifš youāre sticking with the same savings account youāve always had, your money might be suffering.
Around are earning 3% or more on their shortš¦¹-term savings, according to a recent Bankrate āsurvey. The earn close to 5% interest. That means almost 80% of people arenāt taking advantage of higher rates.
Leaving your current bank may seem very easy. Ending a long-term relationship can be hard. But, if you think thereās soāØmething better out there, you may want to consider moving on. Here are five key features you should look for in your next savings account.
1. High interest rates
You donāt have to do all the work when it comes to saving. The higher the interest rate, the faster your money will grow.
Imagine having $10,000 in a savings account with a 0š°.5% interest rate versus a 5% inź¦terest rate. Over a year, the difference in earnings would be $50 versus $500.
Youāll probably not find thāose 5% rates at many big national banks or those with physical branches.
āThe largest banks compete on branch access and range of services, but less-heralded banks compete on rates,ā says Ted Rossman, senior industry ašnalyst at Bankrate.
Many online banks often offer higher interest rates compared to traditional brick-and-mortar banks. Thatās because they have lower overhead costs and can pass on the savings to their customers. The best online banks include Ally Bank, Chime, and SoFi.
You donāt have to move all your money to a new bank or cš¼redit union to take advantage of todayāšs competitive rates.
āYou š can link your existing checking account to one of these high-yield accounts and avoid having to reset all your direct deposit and bill payment information,ā says Rossman.
2. Low ā or better yet, no ā fees
High fees can eat into your savings, reducing the overall growth of your account. Even if youāre earning a competitive interest rate, hefty fees can negate the benefits. You can keep morešŗ of your hard-earned money by choosing an acācount with low (or no) fees.
Some savings accounts come with monthly charges, but šmany offer ways to waive those fees. See if you can meet those requirements by setting up direct deposit or maintaining a minimum balance.
But it may be time to move on if you canāt avoid those fees. By selecting a fee-free account, you wonāt have to worry about following specific rules or meeting certain requirements. Here are four savings accounts that charge no fees.
3. Easy accessibility
Sure, itās a savings account, but that doesnāt mean youāll never need to access your money. Life is full of unexpected events, and having easy access to your savings can be crucial during emergencies. Whether it’s a medical expense, car repair, or sudden job loss, youāll want to withdraw your money without paying fees or waiting days for a transfer to go through.
āMost of us are using lessš„ cash, but when you need some cash, you need toš know your plan,ā says Rossman.
An accounšt with easy accessibility means you can manage your savings conveniently. This includes viewing your account balance, making deposits or withdrawals, and performing transactions online.
Some savings accounts have penalšŖties for making early withdrawals. Review ź¦the account terms and conditions to understand any limitations around accessing your funds.
4. FDIC insurance
You prź¦otect your car, your home, and your health with insurance. The same goes for your savings.
The diffš³erence is that you donāt have to pay for a policy. Most reputable banks offer FDIC insurance (or NCUA insurance for credit unions). FDIC insurance protects your deposits up to $250,000 per person per account. This means that your deposits are safe and protected even if the bank fails, giving youš peace of mind.
But not all balances are FDIC insured, including the balance in your PayPal, Venmo, or CashApp, says Rossman. If youāre keeping money in an account that seems like a ź¦bank but isnāt really a bank, you should know the risk.
āNot everyoneās balance is protected,ā he says. āYour money may be better protected in a small online bank you’ve never heard of than with a well-recognized P2P brand.”
5. Bonus features that help you save
A savings accouą¼nt should do more than accept your deposits. As technology coāntinues to reshape how you can manage your money, think about how new features and tools can help you save better.
Some banks like Ally and SoFi offer the option to split your savings into different categories so you can work toward multiple goals ā like saving for a down payment and spring break vacation ā at the same time. Other banks have savings apps that track your expenses, set savings targets, and moniš“tor your progress over time. They provide an overview of your financial health and help you stay on track with your savings goals.
Some savings accounts offer automation fāeatures that make saving easier. This includes automatic transfers and round-up features. Some banks even offer welcome cash bonuses after you open an account.
The bottom line
If your current bank account doesnāt offer these five features, it may be time to make the switch.
Remember to consider your personal financial goals and preferences when choosing a savings account. By keeping these five features in mind, you can select aš·n account that aligns with your needs and helps you reach š»your savings goals.
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.