Interest rates have been low for several years now, and while that might be good for people with good credit ratings who are looking for a new mortgage, it has proven costly for savers. Bank CDs and savings accounts currently offer interest rates that would have been considered shockingly low just a decade ago. In this low yield environment, savers are looking at other account features in deciding where to open a new account.
For something that seems to be almost a generic service, there is a surprising amount of variety in the terms and conditions that apply from one savings account to the next. Here are some tips for choosing a savings account when yields are so low.
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For example, will paying a small fee on a savings account save you a greater amount in fees on other accounts at the same institution? For example, a local bank might reduce fees or offer a preferential interest rate on an auto loan when you also maintain a savings account there as well. This fee or interest savings might greatly outweigh any small fees you might have to pay for the savings account itself.
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Furthermore, don’t underestimate the importance of saving even just a few dollars every month when trying to choose between two account options. Most people tend to keep a savings account open for many years, or even decades, so small differences in monthly or one-time fees can really add up.
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Perhaps the most important convenience to look for is a savings account that allows you to make automatic deposits or transfers into the account free and for no cost. Automating your savings is (or should be) a foundation of long-term financial success, so whatever account you choose needs to support this.
Finally, it’s important to mention that in all cases, whether an online or a local bank or credit union, you should only be looking at institutions that provide Federal deposit insurance on your account.
Tags: Banking Advice, saving money, savings account