Should I Open a Savings Account | Chase (2024)

FAQs

Should you open a savings account? ›

But if you're looking to set aside money for future needs and goals, opening a savings account is an option to consider. Saving a percentage of your income and putting it into a savings account can help you grow your savings while building a safety net fund.

With interest rates on savings accounts still the highest they've been in years, it pays to save. But while having one savings account is good, many financial advisors and budgeting experts actually recommend keeping several, even if the balance in each one remains small.

Bank and Savings Accounts:

If the young adult does not already have a checking or savings account, he or she should open them. Some choose to link these two accounts through an ATM card; others may determine that this creates an unnecessary risk in the event that an ATM card is lost or stolen.

A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category. Banks that are insured by the FDIC often say “Member FDIC” on their websites.

Because it usually provides interest, allows for easy withdrawals, and is insured, a savings account is most useful for money that you would need in the near future. This makes savings accounts ideal for emergency funds and your large purchase goals.

FDIC and NCUA insurance limits

So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account. After all, if you have money in the account that's over this limit, it's typically uninsured. Take advantage of what a high-yield savings account can offer you now.

First things first: There's nothing wrong with keeping $10,000 in a savings account. If you're working with a reputable bank, your money will have Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per person per account ($500,000 for joint accounts).

Fidelity Investments recommends saving 1x your salary by 30. At the end of 2021, the average annual salary was $49,920 for 25 to 34-year-olds and $58,604 for 35 to 44-year-olds. So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards.

Generally, a child must be at least 18 years of age to open a bank account on their own, with some variability by state. However, there are several options that allow children and teens to access the banking experience before 18 with an adult cosigner or custodian.

Can a 13 year old open a savings account? ›

Minors 13 years or older can open a savings account individually or with an adult co-owner. Minors under 13 must have an adult co-owner.

Unlike checking accounts, they are typically designed for depositing money long-term, with interest payments as an incentive to keep it there. But, once there, can you take money out of a savings account? The answer is, put simply, yes — you can take money out of a savings account.

You may need to make an initial deposit when starting up a savings account. Accounts that have a minimum opening deposit often require an amount between $25 and $100. You can usually fund the account with cash or a check, if you're opening the account in person.

Confirm you have enough money in savings to cover the amount you wish to withdraw. Writing a check for an amount exceeding your account balance can result in overdraft fees or a bounced check. Review your withdrawal limits. Many banks limit the frequency of savings withdrawals to six per month.

Savings account benefits include safety for your savings, interest earnings and easy access to your money. However, savings accounts may have drawbacks, such as variable interest rates, minimum balance requirements and fees.

Among the disadvantages of savings accounts: Interest rates are variable, not fixed. Inflation might erode the value of your savings. Some financial institutions require a minimum balance to earn the highest interest rate.

Savings should come first. Before investing, try to make sure you have a separate low-risk, low-return account you can use to cover expenses during an unforeseen event — typically at least three to six months worth of living expenses.