Do You Need a Savings Account?

Most people have a checking account, but not everyone has a savings account. If you’re considering getting one, this article is for you! Savings accounts are pretty simple to understand:Banks and credit unions typically offer checking, savings, and money market accounts.Savings accounts earn interest (although the amount you’ll make on your deposits is usually very small).Unlike active accounts (like checking accounts), savings accounts are designed for inactive money, so checks aren’t typically issued for savings accounts. HOW MUCH MONEY DO YOU NEED TO OPEN A SAVINGS ACCOUNT? Most banks and credit unions don’t have minimum deposits requirements for a savings account, but there may be a minimum deposit for higher interest rate accounts. Before opening a savings account, you’ll want to check with a bank representative to see if they have account minimums. SHOULD I HAVE A SAVINGS ACCOUNT?There is no magical rule of thumb for opening a savings account because people use their savings accounts for different reasons. You may need a savings account if you:Want a place to hold your emergency fund.Want to separate your money for different purposes—paying bills vs. saving for a car.Want to divide your money for budgeting purposes.You’d like to earn interest on idle money. Unless you have a specific need for a savings account, you may want to keep things simple with just a checking account. THINKING OUT OF THE BOXMany banks and credit unions have started offering interest-bearing checking accounts if you want to earn interest on your money but don’t want to have multiple accounts.Banks and credit unions have different rates, perks, and options when it comes to savings accounts. Bankrate.com is an excellent source to compare accounts across many financial institutions. No matter what you decide, your banker should be able to help you pick the best account for you.