Photo: Paul Esson
Need a place to put your funds for an emergency – perhaps just a safe place to gain some interest? Savings accounts are a great way to stash away money for a rainy day or for another upcoming use. Many banks offer services like Personal Loans, Money Market accounts and Term Deposits, but your primary Checking or Savings account is really where the banking history begins. While you might not just be searching for the best rates, looking for the best savings accounts is a process that will take into account many items.
Will You “Save” at Your Bank?
It’s not likely. However, that’s a situation that will be different in many cases and won’t always reflect the best choice (as opposed to the best rate).
As we will see shortly, it might be wise to go in another direction. However, that doesn’t mean that – at least in regards to rates – that it is the best decision for your needs. You might value the lack of yet another account in your financial environment.
Transactions between your internal bank accounts are generally very quick, though another savings account won’t make that much of a difference. There can also be other reasons to justify ignoring a slightly better rate as well. For instance, many banks offer overdraw protection, where you won’t be hit with an unfortunate charge when you allow your savings account to be a backup.
Plus, it’s just simpler: that may be reason enough to go with your bank’s savings account. Who knows – it might be the best rate around.
The Online Savings Account
There is a new breed of savings account lately – and it’s competitive and convenient. Perhaps not as good as your bank on that last point, but you might be surprised.
These savings accounts work just as easily as your online banking setup. With a login and password, you can access your savings account(s) and transfer money to and from them. Most of these products will offer quick and free transactions – within a few business days, you can have your money in the intended account. Many of them offer advanced tools, such as automatic savings plan (X amount into the savings account each week/month, etc.).
Coming second only to your bank in terms of convenience (most likely; if your bank isn’t up-to-date with online banking and other features, it might be better), online savings accounts often offer the best rates. This is normally the case, as these companies are completely online and don’t have to worry about physical locations like your bank. That certainly translates into the often superior rates that are offered.
Of course, you’ll have to decide what warrants this kind of setup. Perhaps the marginal difference in rates isn’t worth the “extra” account in your financial picture. However, these two options represent two of the strongest choices for a savings account.
As always, do some investigating to see what the actual differences are. This may instantly allow you to make your decision, as you reap the benefits of gaining interest on emergency funds, or your down payment on your upcoming home. Whatever the case may be, take some time to see which option is best before transferring some money to the savings account.
