About a decade ago, opening a savings account might not have been prudent since many banks were shutting down and the yields were disappointing. However, the situation has now improved and having a savings account can be useful. One should consider certain factors before opening a savings account.

Compare and study
One should look at the various rates for savings accounts. Along with that, one should also look at the transaction charges, maintenance charges, and the need for a minimum amount to be maintained. There are many savings accounts that do not have extra charges and low minimum balance requirements. One should check for any other features that might be important, depending on individual preference. Credit unions and banks which have been insured by the National Credit Union Administration or the Federal Deposit Insurance Corp., are the safest options. If the union or bank shuts down, one’s deposit up to $250,000 is secured. Checking the bank’s financial profile is always a good idea when opening a savings account.

Consider online banks
Larger banks tend to have various products with attractive features and many might offer bonuses with accounts as well. But the rates that they offer for savings accounts aren’t very high. In many cases, it is 0.1 percent APR or less. Considering only big banks to open an account isn’t the best idea. Online banks are better for those opening a savings account for the first time. The overhead costs are low for online banks and as a result, they have higher yields. Credit unions, such as Chicago’s Alliant Credit Union, are good options, as their yields tend to be higher.

Reason for saving
It is important to put your savings away. But one should take time to consider the need for an account. Once the requirements are decided upon, you can pick a suitable account. For example, if one wants to save to buy new appliances or a home, one would look for a savings account which is high-yielding and can help save more money within a short period.

Prepare early
It doesn’t take a long time to set up a savings account, especially when one is doing so with online banks. One can save on time by keeping the documents that are required ready beforehand. Usually, one needs to submit details like numbers of one’s social security and driver’s license, as well as one’s address, email, and birth date. If one plans on linking their savings account with a checking account, they should know the account and routing numbers. They should also ensure that a deposit should meet minimum requirements to avoid the account from shutting down.

Make another account
In case one is unable to remain organized and use the money wisely, they should open separate savings accounts to deposit the money for different requirements. Also, as the rates keep rising, having many accounts can also help one benefit from the yields.