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Choosing a new savings account to start banking or to change your financial entity is a decision that should not be taken lightly.
As specialists in personal finance and comparison of financial instruments, we delve into the importance of good research. That is why we want to give you a hand when searching.
What is a savings account
It is a specific type of bank account designed for you to deposit the money that you are not going to need in the short term so that you can obtain a return on it while you do not use it.
These are products with limited operations, since they do not allow most checking account operations to be carried out, such as direct debits of income and expenses, linking debit and credit cards or other financial products such as loans or mortgages.
Although there are banks that allow you to contract them individually, the most normal thing is that you also have to have a checking account in the same bank, to which you will transfer the money when you need it.
The money in savings accounts, unlike certificates of deposit (CDs), is always available for you to use whenever you want, without any penalty for withdrawing it and maintaining profitability.
However, by law in the United States you can only withdraw money from savings accounts up to 6 times a month. If you want to make more withdrawals, you will have to pay a commission.
Differences between savings accounts and checking accounts
These two types of accounts are the most common among bank accounts. Checking accounts are those that are used for day to day and offer full operability to use them as needed.
The main distinctions that we can make between them are the following:
- Remuneration of the balance. Savings accounts always offer a return on your money, while most checking accounts do not pay you anything for your balance, although there are some that do.
- Operability. Checking accounts allow you to carry out any operation: direct debits of income and expenses, link loans, mortgages, debit cards, credit cards, issue and deposit checks, take out insurance and much more.
- Availability. With checking accounts, you can have unlimited access to your money, making as many deposits and withdrawals as you need. In the case of savings, you have a limitation of 6 money withdrawals per month.
- Commissions. Checking accounts have a greater catalog of expenses, which will depend on the entity if they are applied or not. In the case of savings, fees are practically non-existent, at most you can find yourself with a monthly fee that you can normally avoid by maintaining a minimum balance.
How to Compare Between Multiple Savings Accounts
Savings accounts in the United States have the particularity of being structured to accumulate money systematically and for as long as possible. If your intention is to open one to have a money mattress, have an emergency fund or collect money for an important expense, you are on the right track.
As there are so many interesting options on the market, to choose the best savings account we recommend you look at:
Interest rates and APY
By law, banks are required to publish the annual percentage yield (APY) and the interest rate associated with savings accounts. These values are essential to know how many dividends you can get at the end of the year based on the capital you have invested.
Regardless of whether the interest rates are the same value, the higher the APY, the greater the profit. Although this may not mean much in practice, a higher annual percentage yield makes your money grow faster.
Minimum monthly deposit
Just like checking accounts, some savings accounts may require a minimum initial amount or a monthly deposit. For those starting to build an emergency or other fund, this is inconvenient if their income varies each month, and it is advisable to review other options.
In any case, there is a wide variety of offers that do not have this kind of limitation to accumulate capital. Using one of these possibilities will make it easier for you to raise a certain amount, switch to a savings account with a higher APY, and meet the monthly minimum deposit rule.
Commissions
When comparing savings accounts in the United States, it's always a good idea to read the fine print for those little-known fees.
It is not uncommon for banks to want to charge you for annuity, maintenance or for incurring a balance below the limit. Knowing this information will allow you to save more.
It is also important to consider if any of those expenses that they want to apply to you are offset by the benefits included in the savings account.
Remember that neither the APY nor the interest rate include the commissions, for which they are deducting money from you. This fact implies that you must weigh what conditions will be more favorable in the long run for your personal finances.
Availability of services
Finally, we recommend you check the banks that give you greater flexibility of use with these financial instruments. This is because they do not usually include a checkbook and are limited to 6 monthly pre-authorized operations outside agencies or ATMs.
It is a good idea to know how this product can complement your checking account.
En español: Mejores cuentas de ahorro