A savings account is popular for being a crucial tool to manage your money. It allows you to save your earnings for your financial goals as well as emergencies. Plus, you get some amount of money as interest.
However, you will be surprised to know that not all savings accounts are the same and some may even cost you money, instead of providing you with it. Some savings accounts come with a lot less interest rate and some accompany high fees.
Moreover, these are some savings accounts that are terrible in their own way. Therefore, it is important for you to know in which ways your savings account can cost you. Before you put your money in a savings account, make sure you read this to avoid paying additional money for nothing.
Awful interest rates
Some banks provide poor interest rates on their savings accounts. In fact, almost all banks have very low interest rates on their savings accounts these days. Therefore, it is recommended to opt for a bank that provides higher interest rates on its savings account. You will notice that you can actually benefit from this, particularly in case of online banks.
You can go for an online savings account, offered by banks like Capital One 360 and Discover Bank, and get the best interest rates in the market. If you want to select some other online bank than these, you can do a quick internet search for the best online savings accounts.
Some banks charge fees on their savings accounts. These fees can vary, such as low balance fee, overdraft fee, frequent deposit fee, frequent withdrawal fee, etc. Plus, you may even be charged for wanting a paper statement of your account or using an out-of-network ATM.
If you find that your bank is levying a lot of fees on your savings account, then you should switch to a better bank that does not charge as much. You can even choose an online savings account that has no fees or very low fees.
- Not opening sub-accounts
If you have only one savings account for all your financial goals, then you are in the wrong shoes. Since your financial ambitions are different, your accounts should be different too for each of them. You should open sub-accounts of your savings account in order to benefit in future. For instance, you can open a new car sub-account, a vacation sub-account, a home repairs sub-account, etc.
This way you will not only become disciplined, but will also be able to achieve your monetary aims much earlier, rather than having one single account for all of them. You m think before you dip into that account, save for when it is completely necessary. There are many online savings accounts that offer sub-accounts without any fees; you can benefit from these.
- Depositing a lot of money
Yes, when you deposit plenty of money in your savings account, then too you may land up in trouble in future. Of course you should save money, but if you put all of your surplus money in a regular savings account, then you are doing a financial mistake.
This is because it is important to put money in your retirement accounts, like r Roth IRA, 401(k), etc. Moreover, you should invest your money somewhere, like in stocks, bonds, etc., so that you can get higher returns and more money in due course.
Moreover, such investment accounts have many tax benefits too. You can also go for a taxable brokerage account, if you want some investment that gets you higher returns as compared to your savings account.
- Unreliable online security
Today, many banks have an uncertain online security. You can hear it almost every day that a firm’s data has breached, in turn putting the financial and personal details of its customers in danger. Credit card users are most exposed to this danger. Therefore, customers must be aware about their bank’s online security and know about any instances of its data breach.
You must know about the security measures taken by your bank to protect your information in order to avoid any kind of data violation. Being loyal to a bank is not important, if in future you may have to spend a huge amount to resolve an identity theft case.
So, these are some of the means through which your savings account may be costing you money. Beware of these money-losing points and manage your money accordingly. Opt for a savings account that gives you the maximum benefits with minimum fees and higher interest rates.