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A savings account is a great place to stash cash that we need for life goals and for building an emergency fund. Think you know everything there is to know about savings accounts in banking? Let’s take a look.
Here are 10 things to know about savings accounts.
Wondering how much you are actually saving with a savings account? Look for the APY. APY stands for annual percentage yield. It tells you the total amount of interest that you earn on your deposit account in a year.
To get the best APY on a you will need to shop around. Look for the best rates you can find from banks and credit unions and online banks. The higher the APY the better the deal on the savings account.
Online banks have great rates on savings accounts with yields of 2 percent and even higher. It’s a great place to stash cash and gain interest. So put online banks at the top of the list when you are shopping around for a savings account. There may not be a branch with an online bank so if that is important to you, you may want to consider a nearby bank or credit union.
A great way to save money is to set up an automatic deposit from your paycheck to your savings account. Choose a dollar amount or a percentage of your paycheck and have it deposited straight to your savings account. You won’t be tempted to spend it because it is already safe and sound in your account.
A savings account is a great place to save money for life goals such as saving money for the down payment of a car or a house. Having the money in the account keeps it safe and makes it easy to see how you are doing on your goal, just check the balance amount.
A savings account is a great home for an emergency fund. So when an unexpected expense comes up, your car breaks down, a big doctor bill, the washer breaks, you’ll be ready with the money in your emergency fund. You are looking to save three to six months worth of living expenses in an emergency fund. That way you’ll have quite the cushion when an emergency arises. And a savings account is a great place to put that emergency money.
Check your balance with ease by using online banking with your savings account. All you have to do is log in to check your balance, maybe after each payday when you’ll be making an automatic deposit. You will stay on top of your savings balance and on top of your goals.
Don’t have a lot of cash for an account like this? Take a close look at your budget and your expenses. Go line by line looking for ways to free up cash for savings. Put whatever cash you find into your savings account.
Have more than one important savings goal? Open a second account so you’ll be able to track each savings goal separately. You get the same APY, you just have a separate account to help you stay organized. Nothing wrong with having two or three accounts. For example, you may have a vacation fund, a car fund and an emergency fund that you want to keep separate.
Once you reach your savings goal, it is time to cash out your savings. Use the money for the goal. And keep the account open for your next goal and savings plan.
Savings accounts have all kinds of uses and value. Use them to your advantage when saving money. Shop around for the best deal with the best APY that you can find. You’ll earn interest as you build up savings and meet goals.
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