Maybe you’ve been thinking of starting a savings account, especially after paying off your credit card debt. The right time to start a savings account is now. Waiting because of other financial issues can put an additional hold on your plans. Start a routine. Developing savings habits sooner rather than later has no negative repercussions. Even if you are only able to start small and put away a few dollars, you are on your way to building a nest egg.
Types of Savings Account
There are several different types of savings accounts you can choose from, and generally you can deposit funds as often as you like. Savings accounts are insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund for up to $250,000 per depositor.
Generally, the basic savings account has no or a low minimum balance requirement and offers a minimal interest rate on your money. These simple accounts are best suited if you are just starting with a savings account and don’t want to worry about meeting higher balance requirements. If you have a checking account with a financial institution, it’s easy to open a simple savings account and link the two accounts.
Online banks may also offer savings accounts. Since these banks don’t have brick and mortar locations, they tend to offer higher interest rates on your deposit and no (or low) monthly maintenance fees. There are typically no minimum balance requirements with an online savings account. Their online features tend to be robust so that you can link your checking account, remotely deposit checks, and other self-service functions.
High-yield savings accounts offer higher interest rates than basic savings and generally have more requirements. For instance, you might have to keep a monthly minimum balance, or you will have to pay an account maintenance fee. The minimum balance can vary by financial institution and account from as little as $25 to more than $25,000. Generally, the higher the minimum balance requirement, the more interest you can earn on the account.
Choosing a Savings Account That Works for You
When you are choosing a savings account, it is essential to look at the requirements. Determine if you can meet the minimum deposit and balance requirements for the savings account. If you can’t reasonably meet the criteria, you could end up paying more in fees than the interest you earn on the account. If the availability of ATMs and branches are important factors for you, look at financial institutions that have convenient locations.
Digital tools and features such as rounding up your debt, purchases, and having a goal tracker can help reach your savings goals faster. Consider how important these features are to you and how often you would use them. Having a good mobile app experience is necessary for banking on the go. Look at the financial institution’s app ratings on the Apple or Google Play stores.
Some financial institutions will also offer you a sign-up bonus for opening a new savings account. Read the terms and conditions carefully to understand how you would qualify for the bonus. Generally, you have to set up a direct deposit and open the account with a certain minimum balance to qualify.
How to Start Saving
Once you’ve opened the savings account that works best for your lifestyle, you can start saving. An excellent way to start is by creating a realistic budget. Write down all the things that you pay for each month, including rent, food, utilities, and debt payments. Then consider the ways you splurge with your money on going out to eat, movies, buying clothes, and other entertainment.
Determine how much you can tuck away into your new savings account. If there are expenses that you can cut down, try to have those available funds go back into your savings. Or if you finish paying off your credit card, car, or student loan, you might divert those funds to your savings. To make saving an automatic habit, consider setting an amount that will automatically move from your checking to your savings account each month.
NASB has savings account options that can help you achieve your financial goals. Open a savings account today or give us a call at 800-677-6272 to learn more.