byAlma Abell

When Regular Savings interest rates are near 0%, it’s simple to see why many people ignore questions of where they should put their rainy-day funds. Those with financial smarts often assume that they can get higher returns by putting money into mutual funds and stocks instead of into a low-rate savings account, but sometimes having liquid cash is a good thing.

If a person needs fast cash, most options come with drawbacks. Taking a distribution from an investment account can result in taxes and penalties, and using a credit card can mean an interest rate above 15%. Savings accounts provide backup funding for checking accounts, and they offer peace of mind without having to tap into an investment account or credit card.

Reasons to Compare Savings Accounts

According to a recent MagnifyMoney.com survey, 73% of Americans put money into traditional savings accounts with interest rates near 0%, and the average balance is almost $27,000. By comparing rates among offerings from online, credit union and bank savings accounts, customers can maximize interest and minimize fees. However, they should also consider factors such as:

• Fees. Some accounts charge fees for accounts with balances below a minimum, and these fees can negate the limited interest earned.
• Compounding interest. For the highest earnings, interest should be compounded daily.Overdraft protection. If overspending with a checking account is a concern, link the account for additional protection.
• Account setup. If a person is saving for a specific goal, they should find an account that allows for sub-account setup, which makes it easier to track savings.
• Funds availability. The account holder should find out how quickly deposits post to the account, and how long inter-
• account transfers take. Transfers between accounts at the same bank are usually instant, but some online accounts can take a day or more.
• FDIC Insurance. While most accounts are insured by the FDIC, they customer should check to make sure. Savings accounts have many benefits, but one of the biggest is the low risk.
• Withdrawal rules. Most money market and savings accounts limit withdrawals to six per month. Customers should find out what will happen if withdrawals are made too frequently.

Checking fees and requirements on online Regular Savings accounts can take a few minutes more than opening an account in person at Pearl Hawaii Federal Credit Union. However, if the time results in higher interest over the course of the year, the spending is worthwhile.