Diving into Savings Accounts

Rather than “taking the plunge,” opening a savings account
is more like dipping your toe into the water. But, we’ve all
got to start somewhere, and this is where many people start
out. Opening a savings account can be the first step to a lifetime
of good savings habits.

You’ve probably heard the advice, “Pay yourself first.” That
doesn’t mean give yourself some cash so that you can go shopping.
When you sit down to pay bills, write the first check
to a savings or investment account. It doesn’t matter if you
start with a very small amount, just make savings a habit.
And when you get bonuses and raises, you can increase those
checks you write to yourself.

When you shop for a bank, savings and loan, or credit union
where you can open a savings account, make sure to ask the
following questions:

 Is there a required minimum balance for a savings
account? Some institutions charge a fee if your balance
falls below a required minimum.

 What are your fees for savings accounts? You can
expect to be charged either a monthly or quarterly maintenance
fee. The institution may also charge you a fee if
you close the account before a
specified period of time.

 How much interest will I get on my savings? Expect
around 2% interest.

 Is the account federally insured? Ask specifically
whether the institution has Federal Deposit Insurance
Corporation (FDIC) insurance. If it does, then you can
get up to $100,000 of your savings back if the bank fails.

 What services do you offer? Many banks now offer
banking by telephone or the Internet.

 Does the bank use a tiered account system? A tiered
account system allows you to earn higher interest if your
account balance is consistently over an amount specified
by the bank.

Call around to at least three different institutions (banks, savings
and loans, and/or credit unions) to compare their offerings.
(You can also call brokerage firms, which offer CDs, to
find out what their minimums and fees are.)

If the answers to all of these questions come out about equal,
choose the institution that’s most convenient for you and
offers the best service, convenient hours, friendly tellers —
whatever suits your banking habits best.