2 Features I Insist Upon in a Savings Account

by Christy Bieber | Updated July 17, 2021 - First published on April 22, 2021

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A couple counts the bills and coins they've saved in a jar.

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I won't open a savings account that doesn't offer them.

Maintaining a savings account is important. In fact, it's a good idea to have several savings accounts, including one for emergencies, another for big purchases, and others for things like vacations or a home down payment.

You don't want to put your savings into just any account, though. There are a few key features that are important to have. In fact, I insist upon them when deciding where to keep my hard-earned dollars.

1. A generous APY

When I put my money into savings, I'm willing to give up the chance at earning a higher rate of return that other riskier investments (like brokerage accounts) could provide. That's because you can't risk losing money you'll need soon. For example, an emergency fund must be accessible when you need it. And these are both risks with other investments. So even though there are other investments that can provide better returns, a savings account is far less risky.

But I still want my money to work as hard as it can for me. As a result, I prioritize the annual percentage yield (APY) that my savings account provides. APY is a measure of the interest that can be earned over the course of a year. It takes into account both the interest rate that the bank pays as well as how often interest is compounded. Your interest is added to the principal balance to continue earning further interest.

The higher the APY, the more money my saved funds can earn. Since I tend to keep a fair amount of money in savings, even small differences in the annual percentage yield could add up to hundreds of dollars in extra interest each year. I'm not willing to give up the potential to earn reasonable interest, so I won't put my money into a savings account that doesn't offer a generous APY.

2. An easy way to transfer money

Savings accounts should make it as easy as possible to move money over from your checking account or to otherwise deposit funds. After all, the easier it is to move money into savings, the more likely it is that you'll actually save.

As a result, I prioritize simple money transfer rules when looking for a savings account. I want to quickly move money electronically, and I also want the option to automate transfers so I can save automatically. It's also important that there aren't low limits on the amount I can transfer to savings. I don't want to be prevented from moving money over because of a daily cap on the amount transferred.

Getting money out should also be relatively easy. This is especially important for an emergency fund. While money should stay in savings until you have a true emergency -- or until it's needed for whatever you were saving it for -- it's important that you can access your funds easily when you need that money.

A savings account that lets me quickly transfer funds to my regular bank account and makes it possible to withdraw money at an ATM is ideal.

With these two features, I can count on my account growing as fast as possible, since it's easy to deposit money and it pays me a generous return on the money I've put in. Also, I'm confident I can get money out when I need it, which gives me the peace of mind of knowing my emergency fund is ready for use.

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