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Saving money takes time, but learning the basics about saving can take just a few minutes. Check out these bite-sized answers to 21 savings account questions (and the links to more information if you want to dig deeper). Building your banking IQ now can help you make smart money moves in the future.
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 0.45%. 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 1% APY, about $100; 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
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.
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. How often can I make online transfers out of a regular savings account? Typically, there’s a limit of six monthly online transfers.
19. Can I have multiple savings accounts? Yes. They can be helpful for multiple savings goals.
20. Can I open a savings account online? Yes, you can open and fund one with online banking.
21. Where can I find the best savings accounts? Start with NerdWallet’s list of the best savings accounts.
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