opening a savings account

10 Things to Know Before Opening a Savings Account

Ten years ago, there wasn’t much emphasis on opening a savings account. Nowadays, you are not considered financially responsible if you don’t have a personal savings account. People open them for so many reasons and to satisfy different needs, but the main reason why people open a savings account is to develop the habit of saving. 

A savings account is a secure and liquid way to manage your money while earning nominal interests on the side to help you achieve your long-term financial goals. Usually, it’s important that you do some research to help you find the best solution for your financial goals. But don’t worry. This article will provide you with all you need to know before you open a savings account.

1. Determine Your Saving Goals

The key here is to identify what you want to save for. Are you looking to buy a house or to fund a vacation? Once you’ve clearly identified why you need a savings account, you’ll be able to choose the appropriate type of account for your specific needs.

2. Look Beyond the Big Banks

As you save, you expect interest to accumulate. While the big banks may tend to do better promotion and offer bonus packages that are quite enticing, their savings account interest rates might just be lower than that of smaller competitors. So, why limit yourself to larger banks only when smaller institutions might offer better rates? 

3. Compare and Weigh Your Options 

Before you open a savings account, a smart move is to compare savings accounts with the best historical interest rates. You might also want to consider excessive transaction fees, monthly maintenance charges, minimum deposit, minimum balance requirement, etc. Also compare the reputation and health of the banks before choosing where to open a savings account.

4. What Are the Additional Features and Banking Options?

The world is going fully digital. While you may not opt to open an online savings account, you need to find out that the banking facility allows for digitized remote access to your account, as well as support services. Also, find out which banks offer additional features that will be useful to you, such as zero account option, premature withdrawal, loan option, etc. 

5. Find Out the Requirements for Opening a Savings Account

Opening a savings account is usually easy and simple, basically by filling out a simple application form. To save you some time, find out all the documents required and get them ready in advance. Usually, you may be required to provide your Social Security Number and driver’s license number, address, and other basic biodata.

Other things to consider when opening a savings account with a bank include:

6. What Are the Types of Savings Account Options Available to You?

Usually, most banks offer regular savings accounts, money market accounts, and certificates of deposit. Interest rates differ with the type of account, as well as the associated features. For example, some savings accounts provide check-writing privileges, while others don’t. Your choice should always be in line with your savings goals.

7. Will You Be Penalized if Your Account Balance Drops Below the Required Minimum Balance?

Banks sometimes require customers to maintain a certain minimum balance monthly to lap up the attractive interest rate offered initially. And if you fail to keep up with this monthly requirement, you may get a lower or no interest rate. So, it’s always good to check to get an idea of what penalty you can expect.

8. Is There a Limit to How Much Cash You Can Withdraw? 

Most savings accounts come with a cap on your monthly withdrawal limit and frequency. If you need an account that gives you withdrawal freedom without penalties, this is something to check before opening a savings account.

9. Are There Any Charges for Additional Support Services?

You must also beware of charges and fees. Find out if there are fees that you should worry about. Traditional banks in today’s economy now implement more fees on savings accounts than they do for regular banking services. For example, some banks charge you for using their customer support service or when you order a new check-book.

10. How Do You Intend to Fund The Account?

Before you open a savings account, you need to have a plan for how the account will be funded. For example, if you are a salary earner, you could decide to go for automated monthly deposits. This way, can be sure that money is always going into your savings account at the start of your pay period.

One other important thing to know before opening a saving account is that you must read the fine prints in the contract to identify key details about the terms of service. Feel free to ask lots of questions before you open a saving account with any bank. This way, you’re sure to make an informed decision.

Once you have opened your savings account, you can easily connect it to the Emma app to check your balance periodically. Emma supports most savings & investments accounts in the US, UK and Canada.

Good luck in your search!