A Step by Step Guide
Saving money has never been easier thanks to savings accounts. Not only do they allow you to transfer money to pay for things you need, but they provide you with rewarding interest rates for simply keeping a balance. For those who have never opened a savings account before, CNBC Select has put together a guide to help you get started.
Step 1: Choose a savings account
The first step when choosing a savings account is to make sure that it is FDIC-insured. This means that in the unlikely event that the bank fails, your money is still protected and you’ll be reimbursed for your deposit. Additionally, checking for any account fees is crucial to making sure that you can get the most out of the funds you deposit. Opt for savings accounts that do not have a minimum required balance or a monthly maintenance fee and also those that do not charge an overdraft fee. Consider the APY being offered as well. A higher APY means you’ll earn more from your balance and grow your money quicker.
Step 2: Sign up for the account
Once you have decided which savings account you want to open, it’s time to sign up for the account. You can do this either online, through an app, or in person. You’ll be asked some basic information and government-issued ID such as a driver’s license or passport. Additionally, you will need to provide a checking account for depositing and withdrawing funds.
Step 3: Connect your checking account
If you’re opening up an online banking account or an app-based account, you will need to connect a checking account that will be used to transfer funds. This is not necessary if you’re banking in person since you can deposit cash in person at any local branch.
Step 4: Make your first deposit
Before you can start earning interest, you’ll need to make your first deposit. Most accounts don’t require a minimum deposit, but you’ll usually need to deposit at least $1 in order to start earning interest. Some accounts, like the Varo Savings Account, let you start earning interest with a minimum deposit of just $0.01.
Frequently Asked Questions:
Q: What should I look for when choosing a savings account?
A: It is important to choose an account that is FDIC-insured, with account fees you’re comfortable with and a high APY.
Q: Do savings accounts have a minimum deposit?
A: While some accounts require no minimum deposit, most require at least $1.
Q: Can I open a savings account online?
A: Yes, many savings accounts can be opened online or through an app.
Q: Is it necessary to connect a checking account when opening a savings account?
A: If you’re opening up an online banking account or an app-based account, you will need to connect a checking account that will be used to transfer funds. This is not necessary if you’re banking in person.
Q: How do I make deposits and withdrawals from my savings account?
A: You can either do this in person at a local bank branch or online through an app or website.
Q: Are credit unions a good option for savings accounts?
A: Yes, credit unions offer savings accounts. Though the eligibility criteria vary depending on the credit union you choose.
Guide on How to Take Step-by-Step Actions
If you think that the best way to save money is by stuffing it under your mattress or in a piggy bank, then it’s time to reconsider. Having a savings account not only makes transferring money to pay for essential items easier but also enables you to earn an interest on your deposits. This means that your money will work for you and retain its value better than if it was left in a non-interest bearing location. Creating a savings account is also relatively easy, making it accessible to everyone, including students and teenagers who have never held one before.
Choosing a savings account is one of the most challenging aspects of opening one since there are several options on the market, and everyone’s requirements are unique. Nevertheless, there are various useful features you can look out for when making a choice. Firstly, ensure that the account is FDIC-insured. This means that if the bank fails, your funds are still protected, and you will be reimbursed. The industry standard for deposits protection is $250,000 per person, bank, and account type, although some accounts protect more deposits than this.
You should also consider account fees that may be charged. To maximize your return on your deposited funds, consider saving accounts with no minimum required balance or monthly maintenance fees. A zero-overdraft fee account can also prevent you from getting into more debt if you spend more than you have in the account. The Ally Bank Online Savings Account is one option that doesn’t charge these fees. However, it has an excessive transaction fee capped at six transactions per month. Going over this number will result in a charge of $10 per transaction.
The interest rate being offered by your savings account also plays a crucial role in maximizing your return on investment. A higher APY means you’ll earn more interest and, therefore, grow your funds quicker. The rate is dependent on the Federal Reserve’s benchmark rates, but some savings accounts offer a higher APY. For example, the Bask Interest Savings Account offers close to 5% APY, making it one of the top options in the market.
Once you have settled on a savings account to open, the next step is signing up for the account. Depending on the account provider, you can sign up online, through an app, or in-person. Ensure you have government-issued ID, social security number, address, phone number, and checking account details for depositing and withdrawing funds on hand to expedite the signing up process. Credit unions are an excellent alternative to traditional banks since they offer more perks for their members, including better interest rates. However, ensure you read their membership eligibility requirements before signing up.
If you’re opening an online banking or app-based savings account, you will need to connect a checking account to transfer funds. In-person banking is an exception since you can deposit funds directly at a local branch. Once you’ve made your first deposit, you can start earning interest, with earnings automatically deposited into your account. To maximize your saving potential, set up automatic recurring deposits that will fast-track your savings growth.
In conclusion, opening a savings account is a straightforward but beneficial process. Selecting an account that offers flexibility and features that cater to your personal needs is crucial. Making regular deposits and choosing an account that offers a high-interest rate ensures maximum return on investment.