How does a savings account work?
- Aug. 22, 2023
- 2 min read
What we'll cover
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How to use a savings account?
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Benefits of opening an Ally Bank savings account
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How to be successful with your account
A savings account is an interest-bearing deposit account held at a bank or other financial institution. It’s a safe place to store cash, earn interest on your money and is often good for longer-term needs.
What sets savings accounts apart from other accounts is that your money may earn interest while still being easily accessible to you. And as long as your bank is insured like Ally Bank is, your deposits are insured by the FDIC up to the maximum allowed by law.
What important features does an Ally Bank Savings Account offer?
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Compound interest: Savings accounts accrue compound interest . When building wealth, compound interest is your best friend because it allows you to earn interest on your principal and your interest, and your balance grows faster. Ally Bank compounds daily to help maximize your savings.
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Interest rate: This is how much money you’ll accrue on your savings. As an online bank, Ally Bank offers a more competitive rate because we don’t have to support brick-and-mortar branches.
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Annual percentage yield: When researching your savings account options, look for one with a high-interest rate, but focus on the annual percentage yield (APY), which gives you the most accurate idea of how much you could earn since it takes into account the frequency of compounding.
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Minimal fees: Ally Bank’s Savings Account has no monthly maintenance or overdraft fees, although some banks do.
Why should you have a savings account?
1. A savings account separates your everyday spending money from funds allocated for future needs or long-term goals.
2. It’s a great place to keep your emergency fund . Since the funds are liquid, you can easily access them should you need to.
3. By leaving your money untouched, it earns interest and grows.
4. You can save by having money deposited directly into a savings account from your checking account. Ally Bank makes it even easier to do so with our recurring transfers savings booster.
5. Ally Bank’s Savings Account offers tools, called buckets and boosters, to help you save more.
How can you be successful with a savings account?
Building a strong financial foundation with a savings account requires a little planning. To get started:
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Set a savings goal
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Open an account with Ally Bank
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Set up buckets for each of your goals
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Enable automatic deposits to regularly save — a little bit can go a long way
Open an Ally Bank Savings Account to take advantage of the benefits.
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