Bank like a financial pro with the Alliant mobile app. Make payments, deposit checks, manage cards and so much more.
Renovate your kitchen, pay off high-interest debt, or have access to emergency funds when you need it with an Alliant Home Equity Line of Credit.
Browse new and used vehicle inventory, and qualify for a rate discount when you buy!81
Separate each of your savings goals into an Alliant Supplemental Savings Account so you can visualize your progress.
By Michelle Huffman
Savings accounts are relatively straightforward: You deposit cash into an account, and as that cash accumulates, you earn interest — maybe very little, but some.
But not all savings accounts are created equally, starting with that interest. The features of a savings account vary and so do the rules around minimum balances, account fees, deposits, withdrawals and rate tiers.
If you’re wondering how to choose a savings account that’s right for you — ideally one that carries a high interest rate and low requirements — this article will outline the important features of a savings account.
Savings accounts earn interest — their primary benefit over checking accounts — but even so, the interest earned could be very little. The national average is typically around .1% APY according to the FDIC. So a $10,000 balance with an interest rate of .1% APY may only earn around $10 each year. However, high-interest savings accounts will earn many times that and a $10,000 balance could earn $150 or more each year.
A note on interest rates: Financial institutions will often advertise the Annual Percentage Yield (APY) over the simple interest rate, because it more accurately reflects the interest earned by taking into account compounding interest. With compounding, your account balance grows due to the interest over time, and that amount also earns interest. However, the basic interest rate and the APY are often very close, particularly when interest rates are low.
Most financial institutions require some kind of initial deposit to create the account. Typically these fees range from about $5 to $100 for standard accounts.
Many savings accounts have balance requirements, which is the lowest amount of money you must have in the account, typically assessed daily. If you drop below that amount, you may trigger fees. Look for an account that won’t punish you for dropping below a minimum.
Common fees include low balance fees, annual or monthly maintenance fees, dormancy/inactivity fees or ATM fees — though sometimes these fees are waived if you meet certain requirements such as maintaining a minimum balance, having an attached checking account. Look for an account that doesn’t make you jump through hoops.
Some savings accounts offer a higher interest rate when you meet certain qualifications, such as maintaining a high balance or signing up for direct deposit or automatic transfers. Find an account that has a low threshold to earn interest.
Another important feature of any savings account is how accessible it is. You don’t need to have all your banking in one place and an online account could be the most convenient. Check into the process surrounding the savings account’s deposits, transfers, and withdrawals. Also see if the account includes online banking, mobile banking (preferably an app that allows mobile deposits), and ATM access.
If you have specific savings goals, such as a car, home, vacation, or wedding, you may want to open additional savings accounts beyond a primary or emergency savings account. These accounts can be labeled with the savings goal and can be filled by one-time or recurring transfers.
With all these features to consider, spending some time reviewing which account is right for you can make a difference in how much interest you’re able to earn.
Looking for more banking tips? Check out these great posts:
Get even more personal finance info, tips and tricks delivered right to your inbox each month.
Thanks for subscribing to Alliant's Money Mentor newsletter! You will now receive personal finance tips in your email inbox each month.
You are leaving Alliant’s website to enter a website hosted by an organization separate from Alliant Credit Union. The products and services on this website are being offered through LPL Financial or its affiliates, which are separate entities from, and not affiliates of, Alliant Credit Union.The privacy and security policies of the site may differ from those of Alliant Credit Union.
You are leaving an Alliant Credit Union website and are about to enter a website operated by a third-party, independent from Alliant Credit Union. Alliant Credit Union does not manage the operation or content of the website you are about to enter. Alliant Credit Union is not responsible for the content and does not provide any products or services at this third-party website. The privacy and security policies of the site may differ from those of Alliant Credit Union.