Savings Account Finder

What is a savings account?

A savings account is a bank account where you can safely store your money. Savings accounts are federally insured up to $250,000, which means you’ll get your money back in the rare event your financial institution goes under. But they’re more restrictive than checking accounts. You typically don’t get an ATM card or checks and you can’t make more than six outgoing transactions a month due to federal regulation.

The biggest advantage of savings accounts is that they earn interest — often presented as an annual percentage yield (APY). The current national savings account interest rate is 0.05%, according to the FDIC. But you can find high-yield savings accounts or online savings accounts offering rates as high as 0.8%.

How to calculate interest on a savings account

Assuming that interest on your savings compounds daily, you can calculate the amount you’ll earn each day by dividing your APY by 365 then multiplying the result by the balance in the account. Most savings accounts do accrue interest daily, though they credit the earnings to your account monthly. You can use a savings calculator to estimate how much you’ll earn based on the account’s advertised APY.

Do I need a savings account?

Here are three signs it’s time to get a savings account:

• You’re saving up for an emergency or big purchase. If you’ve got your eyes set on an emergency fund, vacation fund, or a big purchase, then a savings account is for you. You’ll earn interest on your deposits, which means you’ll reach your savings goals faster.
• You want to secure your money against theft or damage. Keeping money at home usually isn’t ideal because it can easily get lost or stolen. Savings accounts are federally insured, so don’t have to worry about losing your money if your bank goes under.
• You’re tempted to spend every dollar. When you keep your money in a savings account, you’re less likely to spend it because it’s out of sight. The distance between your saving and spending money makes it easier to reach your goals. Plus, you’ll earn more interest than you would with a checking account.

Is a savings account worth it?

Yes, savings accounts are useful tools to help you save. Your money is safe, protected, easily accessible and effortlessly works for you by earning interest. But you should keep in mind the limitations of a savings account like the six monthly transactions rule and avoid racking up fees that can eat into your savings.

5 common savings account uses

Savings accounts are most commonly used for:

1. Vacations. You can avoid going into debt by saving up for your next vacation ahead of time.
2. Emergencies. Start up a rainy day fund to pay for emergencies like unexpected car repairs, medical bills, job losses and more.
3. Retirement. Setting aside some of your earnings now is the first step to enjoying life in retirement later. After you’re in the habit and have some money to work with, consider diving deeper into planning your retirement.
4. Major purchases. If you’ve got your eye on a new TV, car, home or furniture, you can set the estimated cost or down payment as your savings goal.
5. Protecting funds. Sweeping excess funds from your checking to your savings account, without passing the six monthly transaction limit, will help grow your money and protect your funds should your checking account get compromised.

Savings account fees and limits

Here are some common savings account fees and limits to watch out for:

• Monthly maintenance fee. Some savings accounts charge you a fee each month for maintaining your account, while others are completely free. If your savings account has a monthly fee, you can often waive it by meeting certain direct deposit or minimum balance requirements.
• Withdrawal limits. If you’ve breached Regulation D by making more than six withdrawals a month from your savings account, you may pay a fee or your account will close. Keep in mind that withdrawals at an ATM or branch usually don’t count toward this withdrawal limit.
• Excessive transaction fee. If you go over the six-withdrawal limit, your bank may charge you an excessive transaction fee, usually around $5 or $10.
• ATM fee. If your savings account comes with ATM card, you usually can’t withdraw more than $500 a day, which is something to keep in mind if you suspect you’ll need more cash than that.

Why do some savings accounts have a minimum balance?

Some banks require you to meet a minimum deposit requirement to get the advertised interest rate. Others will charge monthly fees if you don’t meet the required direct deposit threshold, which can quickly eat into your savings. Read the fine print to see if there are any hidden fees you should be aware of. Some banks also require a minimum opening deposit to open your savings account.

6 ways to access your savings account money

You can typically make an unlimited number of deposits into your savings account, though withdrawals may be limited to six monthly. Here’s how you can access your money:

1. Direct deposit. Have your paycheck or government benefits electronically deposited into your savings account.
2. Mobile check deposit. Deposit a physical check by snapping a few pictures of it in your bank’s mobile app.
3. Deposit or withdrawal at branch. If your bank has in-person locations, you can stop by to make deposits or withdraw money.
4. Deposit or withdrawal at ATM. If your savings account comes with an ATM card, you can use it to withdraw cash at any ATM. Depending on your network, you may also be able to deposit cash or checks at an ATM.
5. Wire transfer. Deposit and withdraw money through domestic and wire transfers. But expect to pay a fee.
6. External bank transfer. Move money electronically to and from your savings account using an ACH transfer.

How many savings accounts should I have?

There isn’t a set number of savings accounts you should have. It’s completely up to you. But if you’re coming close to your bank’s $250,000 FDIC coverage limit, you’ll want to find another bank to open an additional savings account.

Aside from this, some people like opening up a separate savings account for every savings goal, so they’re not tempted to spend the money on other things. Others are comfortable keeping all their money in one place. You may also consider keeping a separate one for you and another one under a joint savings account with your spouse. Do what works best for you.

Some savings accounts — such as Ally Online Savings — let you divide your money out into different categories, so you can visualize your progress toward each goal without having to manage multiple savings accounts.

Savings account pros

A savings account can help you reach your goals by offering these benefits:

• Competitive APYs. Unlike most checking accounts, savings accounts pay you a competitive rate for keeping your money in the account. That means you can reach your savings goals even quicker when your money is working hard to make you even more money.
• Savings tools. Modern banks are known for offering automated savings tools and free budgeting templates that help you track, manage and automate your financial goals.
• Low account minimums. Most banks let you open a savings account with as little as $0 to $100 — making it easy to open an account today.

Savings account cons

A savings account can help you tackle your financial goals with unique features, but there are also some limitations to be aware of.

• Variable interest rates. If your savings account has a variable interest rate, your APY could drop in the future — but it could also rise. Interest rates on variable accounts are influence by the economy and the Federal Reserve rate.
• Withdrawal limitations. If you make more than six withdrawals per month, you could be charged fees. Due to the coronavirus, many banks are temporarily suspending this policy, so check with your institution to be sure.
• Watch out for introductory rates. Some savings accounts offer a higher interest rate for an introductory period. If you sign up for one of these accounts, check what your long-term interest rate will be.

How do I compare savings accounts?

When looking for a savings account, make sure it’s FDIC insured and consider the following features:

• High or competitive interest rates. Your interest rate is your reward for allowing your bank to lend out your money. Make your money work hard with the highest interest rate you’re eligible for.
• Low or no fees. Most banks waive monthly fees on savings account as long as you maintain a minimum balance. If you’re paying a monthly fee with your account, it may be time to explore your options.
• Easy to access your money. Accessibility depends on your preferences and personal savings goals. A basic savings account allows you to take out money nearly instantly, while you’ll pay a penalty to withdraw a money from a CD that hasn’t yet matured.
• Rewards for consistent savings. If you find your savings balance building up but at a less-than-average rate, it could be time to switch to a high-yield savings accounts.
• Minimum and maximum account balances. Some accounts will penalize you if your balance is below or above a certain threshold. Make sure the savings account you choose is the right fit for the nest egg you’re tucking away.
• Account requirements. Some savings accounts will require a linked checking account. Credit union accounts can require you to work at a specific place, live in a specific area or meet other membership requirements.
• Additional account. Some banks requires you to also open a checking account at the bank. If you’re not looking to also open a checking account with your savings account, you’ll want to look elsewhere.

What’s the difference between a traditional, online and crypto savings account?

Traditional, online and crypto savings accounts are all designed to help you save money, but there are some key differences to keep in mind.

How do I open a savings account?

To open a savings account, start by filling out an application and providing all of the requested details, including your name, address, Social Security number, driver’s license number and contact information. Then, review and agree to any terms and conditions, and fund the account with cash or a transfer from another bank or credit union.

How much should I save in my savings account?

The amount of money you accumulate in your savings account will vary depending on your goals. Here are a few popular reasons for saving money and how much financial experts generally recommend saving across each category.

• Vacations: Up to 10% of your annual income.
• Emergencies: Three to six months of basic living expenses.
• Retirement: At least 15% of pre-tax income, including employer matches.
• Major purchases: Enough to cover the estimated cost or down payment. For instance, if you are going to purchase a car in three years, every month set aside the amount of the estimated loan payment for the car you want.

Next steps for savings

Looking for more ways to save? These accounts can be used in conjunction with your savings account or as alternatives depending on your needs:

• Spend and save accounts. Some digital banks offer two-in-one accounts designed for spending and saving. If you don’t want to have separate checking and savings accounts, this could be a good alternative.
• Money market accounts. Not to be mistaken with a money market fund, a money market account is a high-yield savings account that usually comes with checks and a debit card.
• Automated savings apps. Several automatic savings apps allow you can use to fund your savings goals without lifting a finger.
• Budgeting apps. These apps help you budget for your future goals and save. Some even negotiate fees and bills for you.

Other savings account tips

After you’ve narrowed down the savings account that’s right for your needs and budget, get the most out of it with our easy tips.

• Keep transactions to a minimum. You’re typically limited to six withdrawals a month. If you need access to your money, avoid the limit by withdrawing at a branch or ATM.
• Set up automatic deposits. Many institutions allow you to make automatic deposits from other accounts, paychecks and more. Choose an amount that works for your finances, and adjust it as your budget and finances change.
• Consider other accounts. A basic savings account is a solid start to building a nest egg. But once you’ve got some money put aside, other options might better help you organize your money and reach your goals, like money market accounts or CDs.
• Keep an eye on interest and fees. Interest rates and fees change over time, which makes monitoring your savings account a must.
• Consider adding family to your account. Maximize your savings by adding a spouse, child or other family member to your savings account.

How to close a savings account

Closing a savings account typically involves transferring all of your funds to a different account and letting your bank know you no longer wish to use your account. Some traditional brick-and-mortar banks might require you to visit a branch to close your account, but most online banks let you take care of it with just a few clicks.

Bottom line

A savings account is one of many tools you can leverage to reach your financial goals. They include everyday savings accounts offering low fixed interest to high-interest money market accounts that offer limited checks. For each, the earlier you start saving, the more time your money has to grow.

Each type of savings account is designed to serve a different financial need. And with so many options at your disposal, weigh the benefits and drawbacks of each option to find the best fit for you. If you know what features you’re looking for, check out the top 10 lists we’ve put together in our guide to the best savings accounts.