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Opening a savings account is a great way to protect your money and build your financial foundation.
You can use a savings account to achieve different financial goals, like creating an emergency fund or buying a home.
The best savings accounts feature higher-than-average interest rates and no monthly service fees. They also offer low or no minimum balance requirements.
According to the Federal Deposit Insurance Corporation (FDIC), 7.1 million Americans were “unbanked” in 2019, meaning no one in the household had a checking or savings account at a bank or credit union.
Whether this is your first time opening an account or maybe it’s just been a while, here is everything you need about how to open a savings account.
How to Open a Savings Account in Six Easy Steps
Each bank or credit union shares a few basic steps you need to follow to open your new account.
1. Choose a Financial Institution
Nearly every bank and credit union in the US offers a savings account. You want to find one that meets your specific needs and financial goals.
Every savings account lets you make deposits and withdrawals. Any savings account you open at an FDIC-insured bank is protected for up to $250,000.
The average annual percentage yield (APY) for traditional savings accounts is about 0.06%. Some high-yield savings accounts offer APYs between 0.5% and 1.5%. But keep in mind that interest rates change depending on economic conditions.
The APY is how much interest you earn on your money each year.
- A $5,000 account balance with a 0.05% APY earns $2.50 a year.
- A $5,000 account balance with a 0.5% APY earns $25 a year.
- A $5,000 account balance with a 1.5% APY earns $75 a year.
Some financial institutions may require you to meet a minimum balance requirement to qualify for a particular interest rate or avoid a fee.
If you already have a checking account, it’s usually easiest to open a savings account at the same financial institution.
Still, it pays to shop around and explore your…
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