How often should you shop for a new savings account?

Searching for a new savings account regularly can help you maximize your earnings and reach your financial goals sooner. (iStock)

No matter your financial goals, putting your money into one or more savings accounts can help you build your balance by taking advantage of higher account rates to maximize returns. Many different savings accounts offer benefits that enable you to reach your savings goals with low or zero monthly fees. For example, you could earn more cash with high-yield savings options via Credible. High-yield savings accounts typically offer exponentially higher interest rates than normal savings accounts. 

However, you shouldn’t just dump your money into a standard savings account. Shopping for the right savings account means identifying which accounts offer certain benefits that cater to your unique financial needs and goals. A different savings account could may be used for different goals and could be used instead of a credit card, personal loan, or even using funds from your checking account. Because interest savings rates and account programs can change at any time, shopping for new savings accounts regularly can actually help you maximize your returns and ensure you don't lose money.

What should you look for when shopping for a savings account?

There are many types of savings accounts and each financial institution may offer different terms for these accounts. When shopping around for a new savings account, it’s important to consider all factors that influence your maximum earnings, including: 

  • Interest rates
  • Minimum balances
  • Fees
  • Ease of account access
  • Length of maturity

It’s always wise to compare multiple savings accounts before you make a decision. Visit Credible to explore high-yield savings options that could be making money for you. 

HOW TO CHOOSE A HIGH-YIELD SAVINGS ACCOUNT

1. Interest Rates

Financial institutions are not required to offer the highest interest rate available which is why you should always compare multiple rates from different banks. 

2. Minimum Balances

Some types of savings accounts will require that you maintain a minimum balance. If your account falls below the minimum balance, you may be penalized. 

3. Fees

Along with potential minimum balance fees, some banks may charge monthly maintenance fees for your savings and checking account which will ultimately limit your maximum earnings. 

4. Ease of access 

Depending on the type of savings account, you may be limited in how often you can access these funds. For example, a money market account may offer a higher interest rate than a traditional savings account, however, it may only allow you to withdraw these funds a few times per month without penalty.

5. Length of maturity 

There are other forms of savings accounts that also have higher interest rates than traditional savings accounts, for instance, a certificate of deposit. CD rates are competitive rates and have a guaranteed rate of return; however, you’re required to keep your savings in the CD until it hits its predetermined maturation date. This could be as short as one month or as long as five years. 

If you want to discover quick and easy ways to save money, you should visit Credible to find a high-yield savings option that best fits your unique savings goals.

How often should you shop for new savings accounts?

There is no single correct way to manage your savings. Some experts suggest opening a new savings account for each of your financial goals. Others advise limiting your accounts to ensure consistent deposits and ease of maintenance. Ultimately, opening a new savings account should happen at your personal speed, convenience and comfort level. 

If you’re new to saving or are only able to deposit small sums, it’s best to open a savings account and shop around for a better interest rate every six months or year. If you have large sums of money, you may benefit from comparing new account rates every three to six months to ensure you’re maximizing your returns. 

Though you may be satisfied with your current savings account, it’s never a bad idea to shop around and compare the latest rates.

HOW MUCH MONEY SHOULD YOU KEEP IN SAVINGS?

What is the national average interest rate on a savings account?

As of Apr. 1, 2020, the FDIC reports a national deposit rate of 0.07% and a national rate cap at 0.82%. for savings accounts. As of this writing, the national APRs for high-yield savings accounts are between 0.52% and 0.6% on average. One significant influence that can cause these savings rates to increase or decrease is the benchmark interest rate set by the Federal Reserve, which influences rates on a savings account, personal loan, credit card, home loan and more. When the Fed reduces their benchmark rate, interest rates are lowered. Other federal government and local economic factors that influence the reduction of these savings rates include:

  • The volume of deposit current at a specific bank
  • Stimulus checks
  • Paycheck Protection Program loans
  • Unemployment bonuses

Although these factors may reduce interest rates across the board, you can still ensure that you receive the best interest rates available by shopping around for new savings accounts. If you don’t want to leave money on the table, you can maximize your earnings with these high-yield savings options on the Credible marketplace. 

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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