Are you considering opening a savings account for the first time? You may have a few questions before you sign on the dotted line. Here are a few common questions you might have regarding savings accounts.

What is a savings account?

A savings account is a type of bank account that can help you reach your financial goals. The accounts allow you to store money in a separate area not designed for direct spending.

The money in this account will earn interest.

What is an interest rate?

An interest rate determines how much money your savings account will accumulate over time. Interest rates vary from bank to bank and credit union to credit union, so you’ll want to be sure you’re getting the best for your money.

What is compound interest?

Compound interest is the idea that your interest gained will be able to gain interest as well.

What are the restrictions on a savings account?

Savings accounts sometimes have restrictions. It could have set minimums you have to keep in the account at all times or you could be restricted on how often you can transfer money out of the account. Talk with your bank if you are not sure about the guidelines.

How is the money in a savings account protected?

All funds in a savings account are insured by the government up to $250,000. If for some reason your financial institution goes out of business, you will still be able to claim your money, up to that amount.

Should I get a savings account?

Yes! Everyone can benefit from a savings account. It’s a safe place to keep your money. Keeping your savings in your home in cash can result in theft or you could lose it all in a house fire. A savings account also helps you save money for a variety of different goals.

What goals should I set for my savings?

The goals you set for your own savings account depend on your own financial situation. How much you save and what you save for is entirely up to you. It’s highly recommended though that you start with an emergency fund that can cover unforeseen circumstances like car repairs, healthcare expenses, and home improvement needs (such as a replacement water heater if yours suddenly fails).

You can also set goals for travel, dining out, expensive purchases for your hobbies, or something else. It’s entirely up to you!

What bank or credit union should I go with for my savings account?

There is no set answer to this question as it depends on what’s offered in your location. You most likely have a lot of choices, though. You will want to do your research into various banks and credit unions to determine what is best for you and your money. Compare things like interest rates, fees, requirements, and more before you make your decision.

A savings account is a must have for anyone. If you’re ready to open one up, talk to your bank or credit union as soon as possible to get started on your savings journey.