Choosing The Best Savings Account

There are wide variety of options and schemes when it comes to personal savings accounts

. Certificate of Deposit accounts, checking accounts and money market savings are quite a few types. There are some key factors to consider when choosing a bank to deposit money. Some of the crucial factors are as follows.

1) Money should be insured against standard organizations. This alleviates risk that may occur when banks tend to invest in high risk market areas. Customer has to check if bank has insured its accounts. Else it is not advisable to choose that particular bank.

2) Interest rates and compounding duration need to be checked. Some banks might offer good rates but the rates would be compounded only at the end of month or statement cycle. Some other banks may seem to offer lesser rates but the compounding would be done daily. The later banks are preferred than the former ones. Alternatively one can check APY rates (Annual Percentage Yield) instead of APR rates. This is because APY is the effective interest that can give the annual interest rate directly.

3) Banks may or may not offer free telephonic and internet banking. They are important when one tries to pay his tickets, bills etc online. Checking the transaction fees before opening accounts can do a lot good.

4) Any limit on the number of fund and inter bank transfers can be checked. Some banks limit the numbers per statement cycle. Anything further would not be encouraged and might result in additional service fees.

5) In case of checking accounts, one need to check for overdraft protection. If one issues a check against an insufficient balance banks may return resulting in poor remarks in person's credit history. This may harm him in his future loan applications from same bank or other banks. Banks which offer overdraft protection need to be preferred over the others.

by: Kamalkk Kannan

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