Opening a savings account can be a great way to safely park your money while also earning interest on your deposits. If you're looking to find the best savings accounts that banks offer, there are four things you should consider.
1. Annual Percentage Yield, or APY. APY refers to how much interest you earn on a deposit during a year, taking into account the effect of compounding interest. This is different from the interest rate, which does not take compounding into account. The higher the APY, the more you can expect to earn on your deposit. But make sure the APY you've been quoted doesn't come with other conditions, like fees or other requirements that don't work for you. Some banks offer introductory APYs that seem attractive until you notice that they won't stay competitive for long. Online banks tend to offer more competitive APYs than traditional brick-and-mortar banks.
2. Compounding method. Compound interest is interest that's paid on both the initial deposit and also on any interest earned. The more frequently interest compounds on an account, the faster your balance grows.
3. Security. Usually, savings accounts are considered low-risk, but you want to be sure any account you consider is at an FDIC-member bank. Deposits in FDIC-member banks are insured by the Federal Deposit Insurance Corporation up to the maximum amount allowed by law.
4. Customer service. Reliable and helpful customer service and an easy-to-use website are important factors in choosing the best savings account. You'll want to be able to quickly find out information on bank products and have convenient access to your account.
Ally Bank is committed to making banking as easy, secure and rewarding as it can be. You can open and fund an Ally Bank Online Savings Account with any amount and get among the most competitive interest rates in the country. We compound interest daily to help your balance grow faster and your deposits are FDIC-insured up to the maximum amount allowed by law. Learn more at Ally.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.