Are you trying to save money but are unsure of where to start? Consider opening a savings account, which is an interest-bearing deposit account that is often kept at a bank or financial institution. Keep reading to learn about the advantages and disadvantages of a savings account and if opening one is right for you and your financial situation.
There are many benefits to opening a savings account, such as:
A savings account, as opposed to a checking account, allows you to grow your savings with interest. Although the average savings account only offers 0.06% APY, some banks offer higher interest rates.+
Experts believe it is much easier to access your money in a savings account as opposed to a certificate of deposit (CD) or money market account. You can transfer funds to another account, use them for bill payments and even make transfers to credit or debit cards.
If it’s an online account, you may have 24/7 access to your funds. However, there is often a transaction limit on how many withdrawals you can make within a given period, although ATM withdrawals and transactions in person generally don’t count toward the overall limit.
It’s always a good idea to have an FDIC-insured account. The Federal Deposit Insurance Company insures up to $250,000, per depositor for each ownership category.
If you have more than $250,000, consider opening a different type of account, such as a joint account, in order to insure more of your savings—just be aware that a joint owner will have full access to any funds in the account.
Now that you know the advantages to opening a savings account, here are some disadvantages you might want to consider:
Even though you have easy access, there is typically a six-transaction limit per month.* This transaction limit is a Regulation D rule put in place to encourage people to save their money—so in fact, it’s meant to help you in the long run. As long as you’re not using your savings account as your main account, this shouldn’t be a problem.
Having 24/7 access to your account is great, but one problem with online banking is that you don’t get the opportunity to build a relationship with the teller or a personal banker. However, if you’re extremely busy, this might be an advantage since you can manage your funds more efficiently.
Unlike many checking accounts, savings accounts offer interest on funds. However, the interest rates are usually lower than certificate of deposit (CDs) depending on the bank.
Now that you know the advantages and disadvantages of a savings account, consider opening one at Synchrony Bank. Ranked as the Best Savings Account according to GOBankingrates.com,** our banking representatives can help you determine if a savings account is the right option for you. Call 844-345-5789 or open an account today to start saving.
Federal Deposit Insurance Corporation: https://www.fdic.gov/deposit/deposits/
Federal Deposit Insurance Corporation: https://www.fdic.gov/deposit/covered/notinsured.html
Federal Reserve: https://www.federalreserve.gov/boarddocs/supmanual/cch/int_depos.pdf
+National Average APYs are based on specific product types of top 50 U.S. banks (ranked by total deposits) provided by Informa Research Services, Inc. CD Rates: Average APYs are based on certificate of deposit accounts of $25,000. High Yield Savings Rates: Average APYs are based on High Yield Savings Accounts of $10,000. Money Market Account Rates: Average APYs are based on Money Market Accounts of $10,000. Although the information provided by Informa Research Services, Inc. has been obtained from the various institutions, accuracy cannot be guaranteed.
*Federal regulations limit the number of electronic and telephone transactions you can make with your savings or money market account to six transfers or withdrawals per monthly statement cycle. If you exceed these limits, we may close your account.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 05/25/2018.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.