Lesson 3 of 3 · 2 minute read
Where to keep your savings
Why a separate, insured savings account is usually the safest place for your money.
Where you keep your savings matters almost as much as how much you save.
Keep it separate
If your savings sit in the account you use every day, it’s easy to spend them without noticing. A separate savings account keeps that money out of sight, and out of mind.
Make sure it’s insured
At a bank, look for FDIC insurance. At a Credit unionA not-for-profit alternative to a bank that is owned by its members. It often has lower fees and lower loan rates than big banks.More in the glossary, look for NCUA insurance. This Deposit insuranceGovernment protection for money in a bank (FDIC) or credit union (NCUA). If an insured bank or credit union fails, you get your money back, up to a limit.More in the glossary protects your money if the bank or credit union fails. It covers up to $250,000 per person at each insured bank or credit union, for most accounts.
You can usually find the FDIC or NCUA sign at the branch, on the website, or in the app.
Cash kept at home isn’t protected. It can be lost, stolen, or damaged.
Watch out for fees
Before you open an account, ask:
- Is there a monthly fee? How can I avoid it?
- Do I need to keep a minimum balance?
- Are there limits on how often I can take money out?
Look for an account with no monthly fee and a low minimum balance, or none at all.
What about interest?
Savings accounts pay InterestThe price of borrowing money. You pay interest when you borrow, and you can earn interest when you save.More in the glossary, and some pay much more than others. Online banks and credit unions often pay more than big banks. But for an emergency fund, safety and quick access matter more than the rate.
Keep your savings in a separate account. Then it is harder to spend by mistake.
Make sure your money is insured. Look for FDIC at a bank, or NCUA at a Credit unionA not-for-profit alternative to a bank that is owned by its members. It often has lower fees and lower loan rates than big banks.More in the glossary.
Deposit insuranceGovernment protection for money in a bank (FDIC) or credit union (NCUA). If an insured bank or credit union fails, you get your money back, up to a limit.More in the glossary protects your money if the bank fails, up to a set limit. Cash at home is not protected.
Before you open an account, ask about monthly fees and minimum balance rules.
Some accounts pay more InterestThe price of borrowing money. You pay interest when you borrow, and you can earn interest when you save.More in the glossary than others. But for an emergency fund, safety and quick access matter more.