Choosing the Right Savings Account

There are plenty of choices available for saving money, so why bother with a savings account that barely pays any interest?

Reason: They're convenient and easy to use -- and often cheaper than other savings alternatives. While money markets and certificates of deposit typically require high minimum balances and impose transaction limits, savings accounts are a simple, no-fuss way to set aside a little money.

If you plan on opening a savings account, here are a few things to consider:

Minimum balance requirements: A high minimum balance is essentially a low-interest loan to the bank. Many banks offer minimum balances as low as $1, such as AF Bank and Bank of the Carolinas (BCAR) in North Carolina, so be sure to shop around.

Fees: Banks often charge maintenance fees and transaction fees on savings accounts. In some cases, these fees are waived if you link your account to a checking account in the same bank. Be sure to look closely at the fee information in the terms and agreements for your account and judge how it might impact your banking habits.

Online banking: Most banks offer online banking in addition to personal service at a local branch, but some charge for anything more than checking your balance. If you do much of your banking on your home computer, make sure the account you choose comes with free online access.

Interest rates: If you can find a convenient and simple savings account that does what you need it to do, great. But if you can choose from among a range of accounts, why not go with one that offers the best rate? In the New York metropolitan area, interest rates with a $1 minimum balance can get as high as 0.5% at Northwest Bancorp (NWSB) vs. only 0.1% at JPMorgan Chase's (JPM) Chase Bank.

To find rate information near you, enter your ZIP code on BankingMyWay.com's savings section.

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