Four factors to consider when opening a savings account
There are some vital points to consider before you commit to a particular form of savings account.
11:32 18 December 2013
It may seem as though every savings account is just the same as the next. There is not much, at first, to recommend an account at one financial institution over an account at a different one. Not all accounts are the same though, so here are a few things to keep in mind when opening a new savings account.
- Minimum amount—some banks may not require a certain minimum amount to keep in your savings account, but most often you will need to keep a minimum balance or incur a fee. In addition to minimums, certain banks may require you to deposit a minimum amount on a monthly basis. If you are not aware of these requirements your funds could quickly be drained by penalties and fees.
- Interest rates—make sure you compare the interest rates for various savings accounts, but also note whether or not the rate is introductory. You could think the interest rate is better, but then be surprised later when it dips below rates you could have received at other banks. Also make sure you know whether the rate will be fixed or variable. If the rate is variable pay close attention to the basis for the variable rate.
- Opening amounts—while you may find an savings account with suitable minimum requirements, you also may need to be prepared for accounts that require a larger sum of money to open the account. Larger amounts may mean that you will be able to receive better returns, but you cannot assume that is the case.
- Accessibility—your funds should be easily accessible without much paperwork if the savings account is going to be for emergency funds. You may not need to access them quickly most of the time, consider what you might go through if you do need your funds immediately.