Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

Advantages and disadvantages of savings accounts

Before deciding if a savings account is right for you, weigh the pros and cons.


Fact checked

If you’re saving for a rainy day — or just a vacation — stashing your money under the bed isn’t the only way to reach your goals.

Most banks offer multiple types of savings accounts that can keep your money safe while paying interest to help you reach your goals sooner. With so many options out there, it’s important to weigh the pros and cons before choosing.

What are the advantages of a savings account?

  • Start with a little. In most cases, you don’t need any money to open a savings account. There’s often no minimum balance requirement and you can make deposits of any size as often as you’d like.
  • Set up an automatic savings plan. This feature automatically transfers a small portion of your paycheck into your savings account when you get paid so that you can “pay yourself first” and develop a habit of saving.
  • Joint accounts. You can open savings accounts with your partner so that you can save together.

Compare joint savings accounts and meet family goals

  • Easy access to your money. Many savings accounts offer easy access to your account with multiple bank branches, ATM cards, mobile apps and online banking platforms.
  • Earn interest on your savings. Financial institutions pay you interest on your savings account balance, and many accounts offer compound interest, meaning your money can earn its own money. You can also keep switching savings accounts to take advantage of attractive introductory interest rates for new accounts, though most institutions will only allow one introductory offer per customer.
  • Savings accounts are free to open. Most savings accounts cost nothing to open and have no monthly fees.
  • No lock-in period. You’re not locked in for any period of time and you can switch savings accounts as often as you like.

Learn how compound interest can help you save even more money

  • Protect your checking account from overdraft fees. If your savings account and checking account are with the same bank, you may be able to link the two. In the event that there isn’t enough money in your checking account to complete a transaction, funds will be transferred from your savings to avoid overdraft fees.
  • Your money is safe. Banks are known for their well-protected vaults, and if your financial institution goes bust, the FDIC will guarantee your savings account balance up to the value of $250,000.

Learn how banks protect your money

What are the disadvantages of a savings account?

  • Rates can change. One key disadvantage is that savings account interest rates are variable, meaning that financial institutions are free to set and change interest rates as they wish. High-interest savings account rates will stay largely in line with the movements of the federal rate.
  • Temptation to spend. Savings accounts are on-call products, meaning you can access your money whenever you want. While it’s nice to have financial freedom, a time deposit may be a smarter option if you’re tempted to dip into your savings.
  • Six-withdrawal limit. Due to Regulation D, savings accounts are limited to six outgoing withdrawals per month. While you’re technically allowed to access your money whenever you want, every transaction above this limit will be accompanied by a penalty fee. However, Regulation D is currently suspended, so check with your bank to see if it’s temporarily waiving its fees.
  • Inflation. If your savings account doesn’t pay a competitive interest rate, inflation could be eating up the value of your earned interest, leaving you with an account balance that’s worth less a year from now than it is in today’s dollars.

Advantages and disadvantages at a glance

Feature Advantages Disadvantages
Interest earned With a high-interest savings account, the interest earned on your balance could add up, especially with compound interest. On the flip side, a savings account comes with variable interest rates, which are subject to change. If the Federal Reserve decides to drop interest rates, you could be earning less interest than if you’d deposited your money into a CD or other time deposit.
Easy access Savings accounts allow you to access your funds whenever you need it – a reassuring feature should you run into emergencies. The ability to access your savings at any time may increase the temptation to spend it. Plus, withdrawals are limited to six per month, so if you go over that limit, the fees can reduce the amount you’re saving.
No lock-in period You’re not locked in for any period of time, which means you can switch savings accounts as often as you like. With no lock-in period, there is potentially no incentive to commit to any minimum monthly deposits.

Compare savings accounts

Consider these savings accounts if you decide the advantages of opening an account outweigh the disadvantages. You can also use the table below to compare accounts and the features they offer to find the best fit for your needs.

American Express® High Yield Savings logo

American Express® High Yield Savings

Name Product Interest rates (APY) Fee Minimum deposit to open Interest earned
American Express® High Yield Savings
Enjoy no monthly fees and a competitive APY with this online-only savings account. Accounts offered by American Express National Bank, Member FDIC.
Axos Bank High Yield Savings
No monthly maintenance fees. No minimum balance requirements. Interest compounded daily.
Aspiration Spend & Save Account

1.00% on $0 to $10,000 but you’ll need to be enrolled in Aspiration Plus and make at least $1,000 in debit card purchases a month
$0 per month or $7 per month for Aspiration Plus ($5.75 per month if you pay annually)
Deposits are fossil fuel-free and insured by the FDIC. Enjoy a spend and save combo account with unlimited cash back rewards and a $100 bonus when you spend $1,000 in your first 60 days.
CIT Bank Money Market
A savings account with a higher-than-average rate and minimal fees.
Central Bank of Kansas City Savings
The Central Bank of Kansas City Savings account, offered through SaveBetter, has a $1 opening deposit and earns 0.4% APY.
SoFi Money
SoFi Money® is a cash management account that charges no account fees to save, spend, and earn cash back rewards when you spend on brands you love.

Compare up to 4 providers

Bottom line

There are a number of benefits to having a savings account, including introductory interest rates, savings plans and online access. Be sure to look at the different ways you can grow your savings before applying for a product. Set-and-forget investments such as CDs can be a handy product to use alongside an on-call savings account.

Frequently asked questions

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site