1. Interest rates. Is the interest rate competitive relative to other banks? Are you happy with the rate? How often does the rate change?
2. Traditional or on-line? Are you comfortable banking with an institution that you can only access by computer or phone? Do you like having physical access to bank representative if you have questions or issues with your account? Is it important to have all your accounts in one place?
3. Convenience. How easy is it to do business with your financial institution of choice? If you opt for a traditional bank in your area, do they have convenient business hours? Are they close to your home or place of business? If you are using an on-line bank with an ATM feature, are their ATM’s nearby?
4. ATM’s. Regardless of the type of bank you choose, if you will be withdrawing funds via an ATM, are there fees associated with the use of the card?
5. FDIC Insurance. Always be sure the institution is insured by the FDIC. While investment companies aren’t covered by FDIC, banks and credit unions are.
6. Restrictions on the account. Be sure to get any restrictions on the account in writing. Many accounts limit the number of withdrawals or transfers that can be made in a month or that can be made without incurring a fee. Some accounts also charge fees if the account balance goes below a set level. Any restrictions should be spelled out in the paperwork associated with opening the account.
Savings accounts are a convenient and safe way to save money. While they do not pack the investment return of a mutual fund, they do provide a convenient, safe and consistent way to save.