What should you look for in a savings account? 

Keep reading to explore all your savings account options and gain a fuller picture of the American savings landscape.

Why open a savings account?

As of 2022, 42 per cent of Americans had less than $1,000 in savings.

Many Americans are committing to mindful spending (and recommitting to saving) in 2023.

If you’re among them, it is likely time for you to open a savings account. When comparing pros and cons, there are more reasons to open a savings account than not.

The cons are: 

• You may need to meet a minimum balance requirement and pay monthly maintenance fees  

• You’ll be subject to federal withdrawal limits  

• Savings account interest rates are variable rather than fixed 

The pros are: 

• Amounts up to $250,000 are protected in savings accounts opened with banks that belong to the Federal Deposit Insurance Corporation (FDIC) 

• Savings accounts are simple to open and link with existing accounts 

• Savings accounts are a liquid asset 

• The startup requirement can be as low as $25 

• There’s no lock-in period, so you’re not tied to the account for a set time and can switch as often as you like 

• Savings accounts do accrue interest, though rates are low — the national average is about 0.09 per cent 

What to look for in a savings account

When opening a savings account, you’ll need to watch out for certain things.

At step one of this process, you must determine your savings goals.

Step two will then be doing your research about savings accounts that might suit you and any requirements associated with opening them.

You should check the following: 

• That there aren’t better-suited offers beyond the big banks 

• That you understand any additional features and banking options 

• Whether you’ll be penalized if your account balance drops below the minimum 

• What you’ll need by way of an initial deposit 

• Whether you’ll be charged any account fees/charged for any additional support services 

• Whether there’s a limit on how much you can withdraw 

• What your interest rate and annual percentage yield (APY) will be (and how this compares to other options) 

42 per cent of Americans have less than $1,000 in savings

The best savings account options for 2023

Choosing the best savings account in 2023 equals sifting through many different options.

If you really want your money to grow, a high APY account is a strong choice.

The best rates currently sit around three per cent, meaning that if you have a savings balance of $10,000, you’ll earn an additional $300 over the course of a year.

Here are some of the accounts with the highest rates available to Americans right now: 

• American Express High Yield Savings Account  

• Barclays Online Savings Account 

• CIT Bank Savings Connect 

• Citi Accelerate Savings  

• Citizens Online Savings Account  

• Discover Bank Online Savings  

• LendingClub High-Yield Savings  

• Marcus by Goldman Sachs Online Savings Account  

• SoFi Checking and Savings  

• UFB Best Savings  

What are the different types of savings accounts?

There are several different types of savings accounts you might choose to open, even beyond the high-yield and lower-yield options.

The accounts that suit you best will depend on your circumstances.

For example, savers looking for quick wins will want something different than long-term lump sum savers who are planning for retirement.  

Best practice dictates that multiple savings accounts be used for different purposes and that your emergency fund be the priority as you begin to build your savings.

Emergency funds will help to protect you from surprise expenses, whether connected to your health, your employment or any unanticipated disaster.

In your emergency fund, you should ideally have enough money saved to cover between three and six months of living expenses.

Beyond this, you might decide to start: 

• A car purchase or repair fund – If you own a vehicle, it’s likely that at one point or another, you’ll need to repair it. Rather than borrowing money through a loan to do so, save up funds for maintenance and repairs so you’re covered when the time comes.  

• A vacation fund – A dedicated account for your vacation savings will enable you to head off on vacations free of worry while separating your necessary expenses and ensuring you’re unable to go over budget. 

• A home or property repair fund – If you need to borrow to fix a disaster in your home, you risk damaging your long-term financial situation. Even if you’re a renter, you could still benefit from a repair fund for personal property for which the landlord is not responsible, such as your TV. 

• A big purchase fund – This will help you when it comes to expenses that you can’t afford to pay for with one paycheck. Having a savings account set aside for this will negate the need to take out a loan/put too much on a credit card and negatively impact your credit score.  

Whether you’re looking to start saving for your children or simply hoping to tuck away more money for a rainy day, there are plenty of savings account options available in the US to suit your needs.

Take your time, do your research, and consider consulting a financial advisor if you’re still feeling overwhelmed by the number of options in front of you.