How to Figure Out the Best Bank Account for Saving Money in Under 1 Minute

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by Michelle Teo

There are more bank account options than bagel options in New York City nowadays. And at the end of the day, everyone wants to find the best deal for themselves, but in the least amount of time possible. I mean, come on, who really wants to be spending hours researching the different CD and savings interest rates, fee structures and fine print policies?

In addition to that, it’s sometimes difficult to know what features or traps you’re supposed to be looking for.

 Well, the good news is that it’s 2019 and there are now great technology apps for that. In fact, Lifesaver is designed to do exactly that for you. It recommends your best banking options based on your specific personal finances and financial needs in less than a minute. 

It takes into account your personal finance situation and evaluates the following criteria to find you your best option.  

What’s the difference Between a savings account, checking account or a CD, anyway?

To start, it’s important to understand what different bank accounts exist for the purpose of saving money. There are basically three types of bank accounts that are designed for your savings. 

They are: 

  • Savings accounts

  • Checking accounts 

  • Certificate of deposit (CD)

SAVINGS ACCOUNT

A savings account allows you to stash your emergency funds away. It limits the number of transactions you can make per month and provides less interest than a CD account. However, keeping a separate savings account means that there’s money that you’ve stored away that’s isolated from your day-to-day spending, meaning you have a higher probability of actually saving for your emergency fund.

CHECKING ACCOUNT

A checking account is for day-to-day banking such as receiving paychecks from your employer, paying bills and withdrawing cash. You can have a debit card and a checkbook with it. Since your money isn’t going to be sitting there for a long time earning interest, many checking accounts do not offer interest rates. 

For a deeper dive on checking accounts, keep reading here.

CERTIFICATE OF DEPOSIT (CD)

A CD is a bit more complex. The interest rates are higher, but in return, you cannot withdraw your money for a specified period of time that you agree to when opening the account,  which can be anywhere from three months to five years. It’s a larger commitment than a checking or savings account. If you withdraw your money before the specified period, you’ll incur a costly penalty fee. So, if you’ll probably need to tap your savings sooner rather than later, it may be better to store it in a savings account. 

The Different Fee Structures to Look Out For

As mentioned before, different types of accounts have different interest and fee structures offered. When you’re evaluating which one will be right for you, make sure you consider the following factors.

SAVINGS ACCOUNT FEES

Savings accounts normally offer low fees and low interest rates. However, you want to be wary of overdraft policies in case you draw more money than what the account has. Notably, the best rates offered for savings accounts tend to come from online-only institutions or community credit unions. 

CHECKING ACCOUNT FEES

Since this is your day-to-day banking account, fees and interest rates offered are generally low—sometimes nonexistent. However, similar to savings accounts, you also want to check that the overdraft policy isn’t high or has charged several times. You also want to make sure that you’re getting a good deal in terms of your ability to withdraw from ATMs outside of the bank’s network (hopefully with low fees or better, no fees). You may also want to avoid any monthly maintenance fees, though sometimes an account may have a suite of features and services that are well worth it. 

CERTIFICATE OF DEPOSIT (CD) FEES

As a rule of thumb, the longer the time period of the deposit, the better the interest rate. However, as you incur a costly fee if you withdraw before the specified time period, make sure you’re comfortable and won’t be needing that money any time soon. 


Narrowing Down the Best Options

Just to mention, all bank accounts in the U.S. are protected up to $250,000 with the Federal Deposit Insurance Corp. So, under this figure, banks can’t actually lose your money.

When you’re narrowing down your options, rest assured that all banks are pretty much equally safe in terms of stashing your cash. So, don’t keep all your accounts under the same bank if you find better deals around the place. If you find a great savings account online, and then a great checking account that suits you at a credit union nearby, then you should definitely go for it. 

LIFESAVER RECOMMENDATIONS

To give Lifesaver a whirl, I’ve included the recommended best bank accounts for someone earning $50,000 a year with around $10,000 of savings. They have the goal of saving an additional $5,000 in 2019. 

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  1. Online Savings by Goldman Sachs

    • Earn 1.2% APY interest

    • $0 to open and $1 to earn interest

  2. Online Savings Account by Ally Bank

    • Earn 1.2% APY interest 

    • No monthly fees or minimums to open

  3. High Yield 12 Month CD by Ally Bank

    • Earn 1.35% APY interest

    • No monthly service fees or minimums to open 

Here’s a snapshot of the first Lifesaver recommendation for an online savings account with Marcus by Goldman Sachs. 

If you found this article useful, keep reading here! And be sure to download the app for even more wisdom and super simple financial management tools.