What places a saving account on the list of the best saving accounts?
A straightforward reply is that a saving account is among the best accounts if it:
- Generate the highest interest over time.
- Offers convenient cash management.
- Charges the lowest fee for services.
- Builds a better banking relationship.
Your primary objective of paying money in a bank account is to keep it safe. You also want to stop yourself from spending it impulsively. It’s your cash at the bank with some benefits.
Cash at the bank is protected by institutions such as Federal Deposit Insurance Corporation. That’s why keeping money safe is not a good criterion to evaluate an account – all accounts keep your cash safe! No additional benefit is there.
In contrast, the high-interest rate is the most attractive feature of your saving account. However, the question is:
Which of saving accounts earns a higher interest?
A simple answer to this question is no one. Yes, no bank pays extraordinarily high returns. You must keep in mind that saving is not investing – saving can never grow as fast an investment may grow.
Consequently, you may earn interest on your savings in bank accounts, but the interest on savings can never be as high as return on investments. It’s commonly in a small specific range.
Typically, the amount of interest on a saving account varies widely – starting from 0.01% to more than 6%. However, most banks often have an interest rate of around 2%.
Though the rate of interest is vitally important, yet it cannot make an account the best alone.
Saving accounts also provide you with a way to keep cash safe, which and you can conveniently pay in and take out to spend at any time. The convenience becomes attractive when you earn interest as well. The higher the rate of interest, the better. Thus, a bank account that offers the maximum interest rate with convenience is preferable.
The convenience to deposit and withdraw cash from a bank account is the second factor that makes a bank account good or bad. It comes after the interest rate, which is no doubt, the essential criterion to figure out which of the bank account is the best.
Another factor that comes into play is the stability of the interest rate over time because some banks offer higher introductory rates. After some time, the banks lower interest rates. That’s why going after attractively high-interest rates on saving accounts bear no fruit.
Before opening an account, you need to evaluate a potential long-term relationship with the bank. It is just like building your credit score. It creates your financial credibility over time.
Always keep in mind, the worst investment is cash. If you are using a saving account, you are just saving money, and no bank is going to offer you higher returns on it.
Moreover, if your cash deposit in a saving account is lower than a specific limit, the bank may charge you a fee for services. Over a year, you may find a balance of $140 in your saving account after paying in $200 initially. It’s because $60 is the fee charged @ $5 per month.
The best saving account in 2020 is the one that earns the highest interest, offers convenience, attracts the lowest fee, and builds a better relationship with your bank.
As of June 2020, following banks offer yield maximum yield:
|CIT Bank||American Express|
|Capital One||Barclays Bank|
|Discover Bank||Citizen Access|