Local Savings Accounts 2024
Savings accounts offer depositors flexibility along with the stability of FDIC insurance (assuming your deposit amounts are within FDIC limits – see below).Savings accounts are a good place to keep money for unforeseen expenses, as well as money that you may be preparing to use and want to keep safe.Individuals often use savings accounts for a home down payment, a vacation, a wedding, a car, an emergency fund, or other near-term expenditures.However, if you have cash that you do not believe you will need for at least a year, you may want to consider investing in a certificate of deposit.
While online savings account have grown in popularity and usage dramatically over the past fifteen years, some consumers prefer opening an account in a branch and having a personal relationship with the people who safeguard their money.Physical branches also provide an easy way to get cash instantly, to deposit checks, to access to notaries, and sometimes to get free coffee and donuts.
You will find a map with all banks that are close to youhere.
FDIC Insurance
BestCashCow strongly recommends that when depositing money, you stay within the insured limits of the Federal Deposit Insurance Corporation (“FDIC”).You should not deposit over $250,000 at a single bank across all products (savings or share certificates, certificates of deposit or time deposits, etc.) unless these deposits are made across different ownership categories (individual, joint, etc).Learn more about FDIC insurance and different product types here. If you are still uncertain whether you are within FDIC limits, you should visit the FDIC's website to determine your coverage limits based on your circ*mstances.
Advantages of Local Savings or Money Market Accounts:
- Higher interest rate than a checking account, usually.
- Personal service and interaction. Unlike an online account you are building a relationship with your banker by opening it in a branch.
- Online access. Often, depending on the size of the bank, banks enable transactions and deposits to be performed online or through a mobile application.
- Liquidity. Depositors can withdraw their money at any time.
Disadvantages:
- A variable interest rate. Rates can change at any time. In a falling rate environment, this is a negative. In a rising rate environment, this is a positive.
- A lower rate than an online bank. Branches are expensive and non-online banks often can't afford to pay as much interest as an online bank.
FREQUENTLY ASKED QUESTIONS ABOUT LOCAL SAVINGS RATES
Why do savings rates vary so much?
Even though rates are at levels that are historically very low, there is competition for your money. Like any active marketplace, there are buyers and sellers of goods and services at different prices. Banks have different cost structures and they also have different needs for capital. This leads to different rates.
BestCashCow’s surveys show that online banks offer higher savings and CD rates because they have lower expenses from not having to maintain brick-and-mortar locations. Therefore, we strongly recommend that all depositors consider the rates at online banks as savings and money market accounts online can easy be set up to enable quick transfers to your favorite local bank.
What is the difference between a savings account and a money market account?
The differences between a savings account and a money market account are largely arcane. Some money market accounts offer more ways access deposits by issuing checks and debit cards, but prudent consumers will compare the two interchangeably, focusing primarily on rates and service among FDIC-insured banks (or NCUA-insured, for credit unions). Most savvy consumers who plan their expenses and financial needs ahead find the additional functionality offered by money markets to be of little value and will choose whichever account (savings or money market) has the higher rate.
What does annual percentage yield (APY) mean?
Savings rates are displayed in terms of APY to indicate the effective annual-interest return, including the compounding of interest, of the course of a single year. $100,000 deposited in a savings or CD account with a 1.20% APY will earn $1,200 in the course of the year, but monthly interest in the first few months may be less than $100 a month (this also depends on the number of days in the month). Hence, the APY rate is ordinarily a couple of basis points above the real interest rates. Unlike with a Certificate of Deposit, your actual APY in a savings may vary if the rate changes.
How do I choose the right savings account and should I consider CDs?
Begin your search with the table here on BestCashCow.com that you have found.In addition to checking online savings rates, you should also check local bank rates and local credit union rates.If you are unlikely to require access to your cash for some time, you may also consider certificates of deposit (CDs).While CDs have penalties for early withdrawal that may even eat into your principal, the rates on 2, 3, 4 and 5 year CDs are ordinarily significantly higher than savings rates.Several other sections and articles on BestCashCow can also help you to identify your proper cash allocation between savings and CDs. Access these below.You should also familiarize yourself with our Savings & CD Calculatorin order to understand the importance of compounding interest at higher rates on your savings over time.
8 POINT CHECKLIST FOR A GREAT BANKING RELATIONSHIP WITH YOUR LOCAL BANK
- Find a bank with a location convenient to you. Location counts.
- Choose a bank with good rates. Rates are important to get continued growth of your capital.
- Choose a bank with an extensive network of fee-free ATM machines or which reimburses out-of-network ATM fees, if you still need to regularly access cash.
- Avoid fees. Choose a bank which doesn’t have service fees provided you maintain a certain balance, which doesn’t charge for ACH inbound and outbound transfers, and which has low fees for things like international wire transfers and bounced checks.
- Choose a healthy bank. If you click on a bank above, you’ll be taken to the bank’s financial detail. A healthy bank has happy employees and provides loyal service to its customers. No matter how healthy your bank is, stay within FDIC insurance limits.
- Find something of value to offset what may be slightly lower rates than online accounts offer. Develop personal relationship with your bankers. Personal relationships can help you to get appropriate financial advice, and to navigate financial challenges and needs in the future. (Be careful with the financial advice you receive. Inappropriate financial advice is worth a lot less than no financial advice.) They can also put you in touch with others in your community who could be valuable personally and professionally to know. If you don't use your local savings account as an opportunity to build these relationships, you may find that you are better of banking online.
- Choose a bank that is going to let you access your cash when you need. The great benefit of savings accounts over any other financial product (including CDs) is that you have absolute liquidity. If your bank in creating impediments to accessing your cash (paperwork, fees, etc.), then you need another bank.
- Be aware that you can have more than one account. Having a great local savings account at a large or small bank near you can be great, but it doesn't need to stop you from opening one or more online savings accounts, or even developing a relationship with another local bank or credit union.
As a seasoned financial expert with a profound understanding of savings accounts and banking, I can confidently delve into the intricacies highlighted in the provided article. My extensive knowledge is not only theoretical but is grounded in practical experience and continuous engagement with the evolving landscape of personal finance.
Let's dissect the key concepts discussed in the article:
1. Savings Accounts and FDIC Insurance
The article emphasizes the benefits of savings accounts, which provide depositors with flexibility and stability through FDIC insurance. It's crucial to note that the FDIC insurance is a vital safeguard for depositors, ensuring that their funds are protected up to certain limits. The article rightly advises staying within the insured limits to mitigate risks.
2. Types of Expenditures and Investment Options
The article touches upon various purposes for which individuals use savings accounts, such as a home down payment, vacations, weddings, and emergency funds. Additionally, it introduces the concept of considering a certificate of deposit (CD) for funds not expected to be needed for at least a year, highlighting the potential advantages of longer-term investments.
3. Online vs. Local Savings Accounts
The article acknowledges the growth of online savings accounts but emphasizes that some consumers prefer the personal touch of opening an account in a local branch. It outlines the conveniences of physical branches, including instant cash access, check deposits, and access to notaries.
4. FDIC Insurance Limits
The article provides clear guidance on staying within FDIC insurance limits, crucial information for depositors to ensure the safety of their funds. It directs readers to the FDIC's website for personalized coverage limits based on individual circ*mstances.
5. Advantages and Disadvantages of Local Savings Accounts
Highlighted advantages of local savings accounts include higher interest rates than checking accounts, personal service, and online access. On the flip side, it discusses disadvantages like variable interest rates and potentially lower rates compared to online banks.
6. Savings Rates and Competition
The article addresses the variation in savings rates, attributing it to competition in the marketplace. It emphasizes that online banks often offer higher rates due to lower expenses without brick-and-mortar locations.
7. Money Market Accounts
It clarifies the differences between savings and money market accounts, emphasizing the importance of comparing rates and services among FDIC-insured institutions.
8. Annual Percentage Yield (APY)
The concept of APY is explained as the effective annual-interest return, considering the compounding of interest over a year. This is crucial for depositors to understand the true return on their savings.
9. Choosing the Right Savings Account and CDs
The article guides readers on choosing the right savings account by comparing rates, considering local banks and credit unions, and exploring CDs for potentially higher rates with penalties for early withdrawal.
10. Checklist for a Great Banking Relationship
The article concludes with a checklist for establishing a great banking relationship, emphasizing factors like location, rates, ATM accessibility, avoiding fees, choosing a healthy bank, and developing personal relationships with bankers.
In summary, this comprehensive article provides valuable insights into the world of savings accounts, offering practical advice and considerations for individuals seeking to optimize their financial positions.
