How to choose the best savings account for you

Best Savings Account...

Everyone understands that a 2.50% interest rate is better than a 1.50% interest rate. However, choosing the best savings account for you involves much more than just finding the best rate, you have to be exceptionally careful before investing in any sort of savings account. Listed below is what will help you find the best savings account so that you can maximize your return and protect your principal.
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How Annual Percentage Yield (APY) Works in a Savings Account

There are two types of interest on savings vehicles. One is simple interest and the other is compound interest. Simple interest is nothing more than multiplying the amount of money you put into the account times the interest and adding that amount to your savings account.

Since your goal is to get the highest possible interest rate on your savings account and make your money work for you, you need to factor in whether the account compounds or not. Compound interest means that you get interest on top of the interest you already earned. To make matters even more confusing, different banks compound the interest at different times. Daily compounding of interest on savings accounts pays more interest than an account that only compounds quarterly. In order to cut through the confusion, the APY or annual percentage yield shows the actual return on an account.

You can find any APY by yourself as long as you know the simple interest rate and the number of times the interest rate compounds. There's a simple formula to use on Excel programs. The formula reads Power( (1+(A1/B1) ), B1) -1 In this case the A1 is the rate the bank gives you for your investment and B1 is the amount of times they compound the principal. You don't need to use Excel to get the APY, you can do the same problem without a computer program.

You'll use the same formula without a computer program but it's going to take a lot longer. In this case it's easier to use the letter n to represent the number of times the savings account compounds each year and use r for the interest rate of the savings account.

If you receive a 6 percent interest rate and it compounds twice a year, your formula would be APR= (1+ .06/2) squared (to the power of 2)-1. The next step is to start the math. APR=(1+.03)squared-1. Then it becomes 1.03 X 1.03=1.0609 -1= .0609 or 6.09 percent.

If you use that same formula on an account that compounds monthly, 12 times a year, you'd end up with 1.005 times itself 12 times you'd have 1.0616778 subtract 1 and your APY is 6.17 percent after you round it. That means that if you had $10,000 in an account that compounded twice a year and $10,000 in one that compounded every month, at the end of the year the monthly compound would reap $617 in interest and the semi annual APY account would only reap $609 dollars.

While $8 dollars doesn't sound like much, consider how much larger that would be on daily compounding or how much you'd accumulate over the course of several years. With the right APY and the miracle of compounding, you can watch your savings account grow faster. No matter what interest rate the banks offer, you'll find that those with a higher APY will make you more money even if the base interest rate is equal.

How to Find the Best Savings Account that will Bring You Profits

You need to know a few basic facts to find the best savings account available. It is a little more complicated than just choosing the bank that is located closest to your home; or the one where a friend or neighbor works.It is very important that you select a bank that will in turn provide you with the best type of saving plan and benefits.

The best savings account is one that will pay you competitive dividends on the money you are depositing. You also need to choose a bank with a good record concerning customer satisfaction and is known to have helpful employees that are ready to help you by answering your questions and assisting you with your financial decisions.

You have the option of choosing a local brick and mortar bank in your community, or you can choose an online bank for your financial needs. Many online institutions are going to have offers that involve the best savings account or best checking account benefits and rewards. The choice of which bank is entirely in your hands.

Compare the Savings Account interest rates at several banks before you make your final decision. Find out about any early withdrawal penalties, and ask if they limit you to a certain number of withdrawals in any pre-set tie period. You also need to know if there are any minimum balance amounts concerning any type of account that you may be interested in signing up for.

When you are searching for a bank that offers the best savings account many people look for the big names such as HSBC, Chase or BB& T. There are some smaller institutions that are stepping up to the plate as well, so you should not overlook them just because they are less well known.

The best savings account is designed to make your financial life safer, easier and more profitable. Make sure that the bank is covered by FDIC insurance at the onset. Ask if you can convert your savings over to CDs at your discretion. Inquire about the possibility of using your savings account to pay bills. Make sure that the hours of operation of the bank are convenient for you and be sure to find out about any phone or online support options that they offer.

Find out about the online banking options that are going to be available. Ask how easy it is to transfer money between savings and checking accounts. A bank that really offers the best savings account has the ability to tailor a package that is ideal for you and your particular situation. Find out if there are any charges for withdrawing savings using an ATM card. Also ask about the process for transfers from bank-to bank.

If you can find a bank that provides you with high yield and no minimum balance requirements these are two factors that frequently signal that you may have found a financial institution that can offer you one of the best savings account plans on the market. You do need to keep in mind that savings accounts are good if you have a few hundred dollars to a few thousand that you need to keep around for an emergency. However if you have substantial amounts of money that you are going to deposit you may need to consider a different financial vehicle that will pay you more interest and dividends.

How to Choose the Right Bank as a Teenager

If you're a teenager chances are you're looking for your first bank account. The best savings account you can find at the moment is one that fits your needs. There are many banks to get these through, and they all have different charges and fees. It can be overwhelming for you at first to try to find the right one, but with some searching you can do it.

The first thing you should do when trying to find the best savings account is to seek advice from your peers. Talk to your parents or grandparents about which banks work the best. Believe it or not they can be quite knowledgeable on the subject, and can even tell you what to do to save the most money. Saving money is something that you're going to need to do this an early age if you want to prepare for your future.

There are a few things you need to look at when choosing a bank. After getting advice from your friends and family you need to see what the interest rates are. Making sure there are no hidden charges is important when choosing a bank. Be sure to read the fine print, and go over any information given to you with a fine toothed comb.

The next thing to look at when looking for the best savings account is if the bank offers free checking. Free checking translates into not having to pay for your checks, or pay fees on anything related to the process. This is an option that many people enjoy having on their accounts and is very convenient. But don't just go with a bank because this option if offered.

Always make sure that the bank with the best savings account you are looking for meets your needs. Some banks offer penalties depending on how much you put back every month. Teenagers don't typically make that much from their jobs, and often don't have 100 to save every month. You can also check to see if banks offer special programs for students and young people.

These programs are there in order to teach teenagers and young adults how to save money properly. Typically the fees are very minimal, and they are very flexible with the program. After all it's there to teach you how to manage your finances properly. Most of these programs have options that allow you to upgrade to full banking plans after you feel that you're prepared enough to handle them.

Another factor that you can look into is if your bank offers an ATM card. These can be very handy to have, and some banks will not charge you to use them. Some banks will even allow your ATM card to function as a credit or debit card if you need to use it online. Just keep in mind not to get carried away with it.

When enrolling with your first bank it's important to find the best savings account available to you. Do you research, talk to people, and finally compare the banks and make your choice. It's important to keep an eye out for hidden fees so read everything. Finally remember to practice sound financial decisions in order to prepare for your future.

Money Market Funds Versus Money Market Accounts in Savings Accounts

You probably hear these terms tossed around all the time: "money market account," "money market fund," and "savings account." But you might be wondering, "What's the difference between these -- and more importantly, what does it mean to me?" Here are three different types of accounts many banks offer

When someone says they have a "money market account," they probably mean that they have something called a money market deposit account. A money market deposit account is pretty much like a savings account, with a few differences. Number one, you get a slightly higher interest rate than you might from a traditional savings account, and number two, you'll have several restrictions on your money that you might not have with your normal savings account. These types of accounts are meant for cash that isn't necessarily going to be liquid (in that you can spend out of that account freely), so it's meant for more of a "save and hold" strategy.

Money market deposit accounts basically give banks a slight advantage over savings accounts, in that they can do a little bit more with the money. And that means, you get a higher interest rate -- but you also get some restrictions as to how you can handle that money. For example, you may have a higher minimum balance requirement to open a money market deposit account, and usually you can withdraw up to six times a month -- which is also true, usually, of a regular savings account. Another restriction with a money market deposit account is that you are usually not going to be able to withdraw your money immediately, and will have to wait up to a minimum of seven days.

A savings account has monies in it that the bank can only use for very specific purposes, and as a consequence, your interest rate is going to be quite a bit lower with a savings account than it would be with a money market deposit account. An advantage, often, of a savings account over a money market fund account, though, is that you don't need very much money to open one (many institutions that offer savings accounts, for example, require that you open and maintain the account with a minimum of just one dollar). Usually, you can do withdrawals for money you deposit to a savings account within one to two business days.

The good news is, for both savings accounts and money market deposit accounts, you're backed by FDIC insurance, which means that the money is guaranteed safe in amounts up to $250,000, per individual, per institution. That means that up to $250,000 of your FDIC-insured money in any institution is guaranteed to be safe even if that institution should fail.

Now, this is a big distinction, because money market fund accounts are NOT the same as money market deposit accounts. Money market deposit accounts ARE FDIC insured, and are guaranteed safe, as described previously, for up to $250,000 in total FDIC insured deposits per institution.

However, money market fund accounts are NOT FDIC insured, which means that should the bank fail, you're not guaranteed that money back. In addition, money market fund accounts fluctuate such that you could conceivably lose money you invest in a money market fund account. The key word here is "invest." Basically, money market fund accounts are a type of mutual fund account (similar to investments you might have in the stock market, or with stock market funds through various mutual fund companies), and they will suffer or benefit from the same fluctuations (profit or loss) as stock market holdings do.

Therefore, if you are looking to save your money, safely and securely, with no risk of loss, opt for either a savings account or a money market deposit account, so that your money will stay safe and secure.