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Savings accounts high in safety even if low in rates

Posted by  on Mar 30, 2010
 

Keeping money in a savings account might seem unwise given the painfully low interest rates offered by most banks and other institutions lately.

You need to remember, however, the role of a savings account in your financial planning: It should provide a safe place to keep money that you want to have available for a specific need, as a cushion for lean times, or in case of an emergency.

Savings Stay Safe with FDIC Insurance

While other investments might appear more lucrative, a savings account insured by the FDIC buys you peace of mind: You know that your money will be there when you need it. Your money also is more accessible than when you tie it up in a CD or other investment.

After you have shopped for the best savings rates, investigate these aspects of a savings account before you commit your money.

  • Confirm that the institution is legitimate and a trustworthy place to keep your money
  • If you plan to deposit a large sum, be sure that your total deposits with that institution do not exceed the FDIC limit of $250,000
  • Be aware of any restrictions on access to your money, and know whether you can afford to commit your funds for the period required to earn the higher interest rate

Online Savings Account Offers New Option

Some online banks offer relatively good savings account interest rates. While you shop online, read a few blogs about the best savings accounts to increase your understanding.

Consider carefully before choosing any account with features that you do not need. For example, a savings account with a debit card might seem handy, but do you really want convenient access to money that you had planned to let sit and earn interest?

Also know the cost of any of these features; avoid trinkets if they come with fees or lower interest that would delay you in reaching your savings goals.

If you keep safety and availability in mind, a savings account can meet your financial needs.

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