How to find the best savings account for you

Investigate interest rates, fees and account types before parting with your money.

by. Geoff Williams

Opening a savings account so your money can generate some interest sounds easy enough. Indeed, the process is pretty simple – and probably far easier than finding money to regularly funnel into savings. But choosing the savings account that best fits your needs can be a challenge. Here are some questions you should ask yourself to find the right savings account you.

Is this savings account FDIC-insured? Unless you’re dealing with a guy who runs a bank out of his trunk, you probably have nothing to worry about. Still, make sure your bank is insured by the Federal Deposit Insurance Corporation, says Yong Wang, associate professor of finance at Western New England University in Springfield, Massachusetts.

That means if something terrible happens, like your bank goes out of business, the federal government will replace your money, provided the account holds $250,000 or less.

To stay competitive, almost 100 percent of the nation’s banks are insured by the FDIC, according to Wang, who adds that only a few state charter banks are not.

Does the account offer a good interest rate? You can stop daydreaming about the wealth you’ll accumulate with your savings account. In recent years, interest rates in savings accounts have tended to resemble the limbo dance (how low can you go?). Still, while rates are unfortunately low – 1 percent annual percentage yield and frequently as low as .01 percent – you’d like your interest rate to be competitive with the other low rates and perhaps provide a bit higher yield.

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