Answers to Your Savings Account Questions in 10 Words or Less

Margarette Burnette
By Margarette Burnette 
Updated
Edited by Alice Holbrook
Answers to Your Savings Account Questions in 10 Words or Less

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Saving money takes time, but learning the basics about saving can take just a few minutes.

Check out these bite-sized answers to 20 savings account questions (and the links to more information if you want to dig deeper).

1. What features should I look for in a savings account? High interest rates and no (or low) monthly fees.

2. What is bank account interest? Money that banks pay you for holding your deposits.

3. What is the average interest rate on savings accounts? Only 0.47%. But many accounts earn much more.

4. Do interest rates change? Yes. They’re variable and banks can change them any time.

5. When interest rates are low, is it worth having a savings account? Yes. You can still earn interest that compounds over time.

6. What is compound interest? It’s interest on the balance added to previously earned interest.

7. How much interest will I get on $10,000 after one year? With 5% APY, about $500; with 0.05% APY, about $5.

8. What does APY stand for? Annual percentage yield.

9. What is annual percentage yield? The rate of return on money in a bank account.

10. Do savings accounts charge monthly fees? Some do if the balance is small. Others are free.

11. How much money should I keep in a savings account? Try to have enough to cover expenses for three months.

12. What's an easy way to build my account balance? Set up an automatic deposit with each paycheck. » MORE: Learn how to make a savings plan

⏰ Limited-time offer

SoFi Checking and Savings

SoFi Checking and Savings

SoFi Checking and Savings

NerdWallet rating

4.5

/5

Bonus

$400

Limited-time offer

Learn more

at SoFi Bank, N.A., Member FDIC

AD

sparkle-illustration

Don’t miss out on a bigger bonus

Get a NerdWallet-exclusive bonus of up to $400 when you open an account and hit $5,000 in direct deposits within 25 days after your first one. That’s $100 more than SoFi’s normal $300 bonus! Select "Learn More" to get started. Expires 4/22/24. Terms apply.

13. Can my kid open a savings account? Yes. Interest-earning savings accounts for kids are great options.

14. Is my money protected in a savings account? Yes, at federally insured banks, up to $250,000 per depositor.

15. What happens to my savings if my bank fails? Funds are returned to you, up to the insured amount. » MORE: Learn about FDIC insurance and NCUA insurance

16. Are there different types of savings accounts? Yes: regular savings, money market accounts and certificates of deposit.

17. What’s the difference between a checking and a savings account? Checking covers everyday spending; savings covers emergencies and goals.

18. Can I have multiple savings accounts? Yes. They can be helpful for multiple savings goals.

19. Can I open a savings account online? Yes, you can open and fund one with online banking.

20. Where can I find the best savings accounts? Start with NerdWallet’s list of the best savings accounts.

On a similar note...

Find a better savings account

See NerdWallet's picks for the best high-yield online savings accounts.

⏰ Limited-time offer

AD
NerdWallet rating 

4.5

/5
SoFi Checking and Savings

at SoFi Bank, N.A., Member FDIC

APY

4.60%

With $0 min. balance for APY

Bonus

$400

Limited-time offer

Up to $300 cash and $100 in rewards points. Terms apply.

Get more smart money moves – straight to your inbox
Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money.