What To Look For When Choosing a Savings Account

Recent research shows that the average American savings account ¹ balance is $4,500. Reaching your savings goal, whatever it may be, comes down to finding the right account that aligns with your needs and helps you achieve financial success.

It’s important to understand some key factors about savings accounts to ensure that you make an informed decision and set yourself up for a successful future:

1. Competitive interest rates: The interest rate on your savings account impacts how much your money will grow over time. The average savings account in the U.S. has an interest rate  ² of 0.40%. Finding a savings account that offers competitive interest rates is key to ensuring that the dollars you save are working hard for you.
2. Low or no fees: Fees can eat into your savings and hinder your progress. When selecting a savings account, it would be wise to consider accounts with minimal costs, or options to waive them based on certain conditions.
3. Accessibility and convenience: In today’s digital age, it is important to have access to your savings at your fingertips. According to Bankrate, the use of mobile banking ³ as the primary method of account access rose from 15.1% of U.S. consumers in 2017 to 43.5% by 2021. Look for a financial institution that offers online banking and mobile apps, allowing you to manage your savings anytime, anywhere.
4. Account security: The security of your savings is a fundamental consideration. Ensure that the financial institution you choose will provide robust protection measures for your funds.
5. Additional benefits and services: A savings account can offer more than just a place to park your money. Seek out financial institutions that provide other benefits and services to enhance your savings experience. For example, does the institution provide financial education resources or personalized guidance to achieve your savings goals? Are there exclusive perks like discounts, loans, or special member offers?

Beyond these considerations, there are different types of savings accounts available that could help you meet your financial goals:

1. Traditional savings accounts: These are offered by banks and credit unions and provide a safe place to store money while earning a modest interest rate.
2. High-yield savings accounts: These provide higher interest rates than traditional savings accounts. An Affinity high-yield ⁴ savings account, for example, has four balance tiers offering progressively increasing rates, up to 2.25% Annual Percentage Yield.
3. Individual retirement accounts: These savings funds provide tax advantages and are designed to help individuals save for retirement. You can also pull from them whenever needed.