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Last updated:
May 28th, 2024

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Savings Accounts 101

A savings account is a smart way to save money. The federal government limits the number of withdrawals, forcing you to leave your money alone.

A savings account is a safe way to protect your money. Savings accounts at traditional banks, credit unions, and online accounts are FDIC insured.

A savings account is a successful way to earn interest of your own money. The best savings accounts can earn 20 times the national average.

Let's look at why savings accounts are smarter, safer, and more successful than keeping money in your sock drawer or under your bed.

What is smart about a savings account?

Federal regulations limit the number of withdrawals from a savings account to six each month. There is a fee for each withdrawal above six. Because you can only make six withdrawals, you must be strategic about when you make withdrawals. This helps you keep the money in the account and avoid spending it on frivolous things.

A savings account is set up to help you save money. The goal is to have six months of income in a savings account. Don't let that number scare you. Start with an amount you can reach, like $500. When you reach that amount, increase your goal to $1,000. Keep increasing your goal until you have enough to feel comfortable in the case of an emergency.

What is safe about a savings account?

Banks and credit unions, including online accounts, are FDIC insured. Each account is insured up to $250,000 by the federal government. If the bank fails, your money is protected. Because of this insurance, having a savings account is a safe decision.

Savings account do not offer fixed interest rates like CDs. But the principle amount in a savings account will not decrease with the market, like stocks or bonds. You may earn slightly lower interest if the market fluctuates, but you will not lose your principal amount. This makes savings account a safe investment as well.

What makes savings accounts successful?

Savings accounts with competitive rates help you reach your goal even faster. The national average for traditional savings accounts offer interest rates around 0.09%. That is extremely low. An online savings account can earn up to 2.0% interest. That is a great way to increase the amount of money you make each month.

Another way to reach your goal is to set up automatic transfers. You choose the amount you want to transfer into your savings account each month. You can also select the day the money will transfer each month. Then you don't have to remember to transfer money into your savings account. Your balance grows, and you earn interest. Banks may offer this option as a way to waive a monthly fee as well if your account has a fee.

How do you find the smartest, safest, and most successful option?

The charts on Bankowl show which accounts earn the best rates. You can review different banks to find which bank is the best for you. You can compare different banks to see the pros and cons side by side. These tools can help you make the smartest, safest, and most successful choice.

Whether you are saving money for a vacation, large purchase, or emergencies, having a savings account is a good idea. Let Bankowl help you find the best account for your financial needs.

High Interest Online Savings Accounts in May 2024

Don't pay your bank—make them pay you! Get up to 20x4 higher interest rates than the national average. This is our hootworthy list of banks that meets our requirements of a high interest rate and fantastic customer service. All banks are FDIC insured up to $250,000. Your money is safe and ready to earn more interest!
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