5 Factors in Comparing Savings Accounts

May 7th 2016

Before you choose a savings account, analyze each of your options to determine the best financial fit. A financial professional may be well-suited to help you. With a careful approach, you can save money and grow your balance.

Annual Percentage Yield

The money you put into savings accrues interest over time. If you plan to leave your deposits in place for a long time, you should consider the annual percentage yield. The APY, which is usually expressed as a percentage, helps you understand how much money your deposit makes every year. In most cases, a higher APY is preferable.

Initial Deposit

Many savings institutions set minimum initial deposit limits that you must meet to open an account. If you are planning to open an account with an amount less than $100, look for accounts with no initial deposit requirements.

Monthly Fees

Some savings accounts come with monthly maintenance or service fees that the bank deducts from your account automatically. Depending on the type of account, banks may charge fees if your balance falls below a certain dollar amount. If you anticipate transferring money between accounts or taking out funds to cover bills, consider looking for a savings account with no monthly fees. All banks disclose their fees, but you may need to read through the agreement carefully to find them. Don't rely on the information listed in promotional brochures, as it is often incomplete — seek out the full terms before signing up.

Transaction Limits

Banks that offer savings accounts must permit at least six free outgoing transactions per year, per customer. If you plan to withdraw or transfer money from your savings account more than six times in a calendar year, consider looking for a bank that offers additional free transactions. Regardless of your withdrawal plans, it is important to study the fees associated with withdrawals that exceed the free limit. Fees for unexpected withdrawals can add up quickly over the course of a year.

FDIC Membership

When choosing a savings account, it is crucial to select a bank that is a member of the Federal Deposit Insurance Corporation. FDIC membership ensures that if your bank fails, you do not lose money. Membership is important mainly when you are considering a savings account with an online bank, as not all online entities are FDIC members.


A savings account is one way to make your money work for you, but not all accounts are the same. When you are choosing an account and a financial institution, it is important to understand the factors that impact your balance. By selecting a plan that fits your situation, you can avoid losing money to unexpected fees or unforeseen issues with the bank.

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