Just get started. Basics for How To Open A Savings Account
If you are looking to earn some money on the money that is just sitting and doing nothing in a checking account, PayPal account, or elsewhere, you should consider opening a savings account. It is very easy to open a savings account at virtually any bank or credit union. You can even do it at most places online (provided you already have the money in another account and you can access it easily online).
A savings account enables you to earn a small amount of interest on your money each month. The amount varies depending on where you open your savings account and what type of savings account you open. Most banks offer two main types of savings accounts – a basic savings account and a money market account.
Passbook Savings Account
A basic savings account (sometimes called a “passbook savings account”) is a type of savings account that will usually either have no minimum balance requirement or a relatively small amount. However, this type of savings account won’t provide you with much interest (the typical rate is usually less than 1% per month). You can usually withdraw your money whenever you choose with a basic savings account, thereby allowing you to have virtually instant access to it in the event of an emergency or other circumstances.
Money Market Account
A money market account is another type of savings account that will usually pay a higher interest rate each month. However, you usually have to have a higher minimum balance in order to open and maintain without fees a money market account. Additionally, you are usually limited to how many withdrawals you can make per month (usually between 3-6 withdrawals per month depending upon which institution you open an account with). Some institutions will also allow you to write up to three checks in addition to the withdrawals each month, giving you a little more maneuverability when it comes to using that money in your money market account.
As mentioned earlier, it always pays to shop around both offline and online to find the best savings account deal for your particular situation. This should take into account what your goals are and/or what you plan to do with the money that you are investing. If you are saving up for college, planning a well-deserved vacation, looking to purchase a home, or any other major expense, you should carefully evaluate what bank or credit union will provide the most money for you long term until you reach that time when you need to use that money.
You should consider the fees and service charges that are associated with the savings accounts you are considering. You should also make sure about any minimum balance requirements; many banks will not charge you a fee if you keep your balance above a certain threshold. Of course, you should certainly pay attention to how much interest is being paid on your balance.
When you open a savings account, you will receive a small book called a “register.” This book helps you to keep track of what your opening balance is, as well as all additions and withdrawals you make to and from the account. The bank or credit union will send you a monthly statement of your account to inform you of your balance and any transactions that have taken place since the last statement. You can either choose to receive this by postal mail or email, though many banks and credit unions prefer you to choose email. This is why many banks and credit unions will deduct a fee from the interest you earned for the month when you request a statement by postal mail. Some banks and credit unions will even give you bonus points on an associated credit card if you choose to receive email statements each month.
Many savings accounts will also give you the option to set up automatic withdrawals from your paycheck. You would set this up via the bank or credit union’s website. This is a very good idea for those who have trouble setting aside money each month to put toward their savings accounts. Of course, you should be putting aside money each month to help boost your balance that much faster, as even money market accounts do not pay high interest rates where you can just rely on those to help you reach your monetary goals within a reasonable time frame.
In this difficult economy, it is very important to save as much money as possible. Additionally, the cost of going to college and other important purchases continues to go up (insurance, etc.). While some people complain about the low interest rates earned on savings accounts and advocate instead to invest your money in the stock market and riskier assets, the point is that putting money into savings accounts is safe (banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account, while credit unions are insured by the National Credit Union Administration (NCUA) for up to $250,000 per account)) unlike the stock market and riskier assets. Unless you feel very confident about the stock market and know how to manage its many winding curves, your safer and better bet to earning long-term monetary growth is by opening a savings account at your preferred bank or credit union.