Tips for choosing from the top 10 savings accounts
A savings account allows you to earn interest on the cash that you have stored securely in your account. Savings accounts work in a sense that you lend money to the bank by depositing it in their bank. The money turns around and is offered as loan to other customers. The banks levy interests rate on the loans that they provide to their customers and offer interest on the money that is deposited in the savings account. There are some savings account that offer great interest rates. Before discussing which are the top 10 savings accounts that you should consider, let’s get to know the basics of the same.
How to choose from the top 10 savings accounts?
The types of savings accounts depend on your financial goals. There are three basic types of savings account:
- A Money Market Account usually requires minimum balance. It offers returns at a slightly higher rate. The account comes with limited transactions per month, and it also comes with a debit card and the facility to write checks for transactions.
- The most basic savings account offers a low interest rate. Some of them offer 5% to 6% interest rate on savings account. However, you can keep your money safe as it gives you quick access for transactions during emergencies.
- A Certificate of Deposit (CD) account is a type of fixed deposit that you can keep for few months to a couple of years. This type of savings account offers the highest annual percentage yield. They work in a way that the longer you keep the cash in the form of certificate of deposit, the higher the interest rate.
What are the things that you should consider before opening a savings account?
Before you choose to open a savings account from the top 10 savings accounts, consider the following five pointers:
- Some savings bank accounts require an initial deposit which is the minimum amount of money to open a bank account. However, this does not mean that you have to maintain a minimum balance each month. Read the terms and conditions of the specific bank that you are opening a savings account in.
- Banks that do not require you to maintain a minimum balance in your account offer lower interest rates than the banks that do. Keep in mind that a fee might be levied if the amount in your savings account dips below the allowed minimum.
- Your list of top 10 savings accounts should be good with technology so that it can help you keep a track of your money. Look for a bank that has a mobile app and whether it offers remote check deposit.
- If your transactions are strictly digital, consider an online or mobile-only bank.
- When looking to open a savings account in a bank, look for those banks that are backed by the (FDIC) Federal Deposit Insurance Corporation. Also, look for those savings bank accounts that offer a 5 to 6% interest rate.
What is an APY and how is it linked with a savings account?
The percentage rate that shows an estimated amount of interest that will be paid on an account is called as Annual Percentage Yield (APY). It is based on the interest rate and the percentage and the frequency that is compounded over a 365-day period.
Which are the top 10 savings accounts that one should consider?
Based on the reviews and on the services provided by the banks, here are the top 10 savings accounts with interest rates that you should consider:
- Aspiration Summit provides 1 percent APY on balances over $2500. It also provides unlimited ATM reimbursements without incurring any monthly maintenance fee or minimum balance requirement.
- With a good interest rate to offer, Ally Bank have over 43000 free ATM services. They also have an online-only bank service that has call-centers working 24×7.
- Bank5 has an online banking service that has a $15 overdraft penalty which is quite lower than the national median of $34.
- Alliant Credit Union offers direct, ATM, and mobile deposits and transfers from other financial institutions. Availing to these services will qualify you for a return of 0.65% of APY on the account.
- Other banks with similar features include Capital One, Discover Bank, Simple Bank, Chime’s, CitiBank, and Synchrony Bank.