One of the best ways to save money is to do it with a savings account. The under-the-mattress approach doesn’t work like it used to.
In this article, we’re going to go over why a savings account might make sense for you and what types to consider.
What Is A Savings Account And How Do They Work?
A savings account is one of the basic accounts you can open at your bank or credit union. With a savings account, you can deposit money and let it grow over time.
If you need the money, you can simply withdraw it from your savings account, but if you keep it in there it can earn interest.
You may be wondering what type of savings account should you get? Well, you need to pay particular attention to the kind your bank is offering.
Some savings accounts allow you to make little to know money on interest, so you’d want to steer clear of those. The type you want is a high yield savings account.
What Is A High Yield Savings Account?
A high yield savings account is one in which the high interest rate allows you to earn more money — as much as 25% higher than a traditional savings account.
To find out what type of interest you’ll get, notice the APY (annual percentage yield) of the savings account.
Should You Open A High Yield Savings Account?
As long as the bank is FDIC-insured, your money in a high yield savings account is guaranteed. So what’s the worry?
If the economy is in distress (like we are right now) you likely won’t make a lot of money in a high yield savings account. That means the amount of money you have in there will sway up and down.
So while you assume no risk of losing your initial deposit, the amount of interest you have on top of it is subject to market volatility.
Where Can I Open A Savings Account?
In the big city, you have plenty of options on where to open a savings account. Here are some major banks you may want to consider. These banks and the rates are good as of 2020.
| Bank | Savings Rate |
|---|---|
| Alliant | 0.40% |
| Nationwide | 0.55% |
| Discover Bank | 0.55% |
| Marcus (Goldman Sachs) | 0.60% |
Final Words
Opening a savings account is a great way to make the most of your money. If you choose wisely, you will see an increase in your savings account little by little.
Are you trying to become more financially literate? Check out Money Mondays at AtlantaFi.com, where we’ll share strategies to save and make cash.