Saving money for the future is essential for achieving your goals and maintaining financial well-being. Whether you’re building an emergency fund, planning for college, or saving for a house, having the right savings account can help you grow your money while keeping it safe and accessible. But with so many options available, it can be challenging to know how to choose the best savings account for your needs. In this guide, we’ll help you choose the best savings account by looking at key factors like fees and limits, reviewing the types of savings accounts, and comparing their pros and cons.
How To Choose a Savings Account: Factors To Consider
A savings account helps you grow your money while keeping it safe for future needs. But not all savings accounts are the same, and the right one for you will depend on your financial goals, banking habits, and how you prefer to access your money.
Use the following key factors to compare your options and choose the right savings account for your needs. As you review them, make note of what matters most to you—interest rates, fees, access, or flexibility.
1. Know the Pros and Cons of Traditional vs. Online Banks
When comparing savings accounts, one of the first decisions you’ll make is whether to open an account in a traditional or an online bank. While traditional banks offer in-person services and a broader range of financial products, online banks often provide higher annual percentage yields (APYs) and lower fees, thanks to reduced overhead costs. Here’s how to choose the best bank for your savings account based on your preferences:
Choose an online bank if you:
- Feel comfortable banking online
- Prioritize the convenience of digital banking
- Want to maximize your interest earnings with a higher APY
Choose a traditional bank if you:
- Prefer face-to-face interactions and branch access
- Value personalized service and in-branch support, or need to deposit cash
- Want to access other services like loans, financial advising, and safe deposit boxes
2. Look for Low Fees and Understand Minimum Balance Requirements
In general, savings accounts carry fewer fees than checking accounts, but always review the bank’s fee schedule and minimum balance policies before opening an account. It’s common for banks to charge a monthly maintenance fee if your account doesn’t meet certain criteria. Some online banks offer fee-free savings accounts, but others may waive fees only if you:
- Maintain a minimum balance above a particular threshold
- Allow automatic transfers or direct deposits
- Link to a checking account with the same banking institution
Policy Tip: Watch out for less-visible fees like excessive withdrawal charges or inactivity penalties, which can eat into your savings over time.
3. Check Policies on Linking to External Accounts
Your savings account doesn’t have to be with the same institution as your checking account, but always review the banks’ policies regarding external linking. Ask your bank questions like:
- Can I set up automatic transfers between accounts at different banks?
- Are there any fees for transferring funds between accounts at different banks?
- Do I need to keep my checking and savings accounts at the same bank to avoid monthly maintenance fees or unlock features like overdraft protection?
4. Understand Withdrawal Rules To Avoid Surprise Fees
Some savings accounts limit you to six withdrawals per month—a rule based on federal regulation that was lifted in 2020—though many banks still follow it. If you exceed that limit, you may be charged an excess withdrawal fee for each additional transaction.
For example, if your account allows six withdrawals per statement cycle and you make a seventh, you could pay a fee of $5–$10 depending on the bank.
This is important if you need frequent access to your savings, such as for budgeting or transferring to cover expenses. In that case, look for:
- Banks with more flexible withdrawal policies
- Hybrid checking/savings accounts with higher liquidity
- Digital banks that don’t penalize excess transfers
Types of Savings Accounts
Choosing the right savings account starts with understanding your options. From traditional savings accounts to specialized, high-yield, or goal-based accounts, each type offers different features depending on how you want to save, access, and grow your money.
How many savings accounts you should have depends on your needs and goals. You may find that one account fits your needs, or that having multiple types helps you reach your financial goals like building an emergency fund, saving for a big purchase, or earning more interest over time.
Here are the most common types of savings accounts and how they work:
Traditional Savings Account
Most brick-and-mortar banks and credit unions offer traditional savings accounts. These accounts are secure, easy to open, and usually come with access to in-branch services like financial advising, loans, and customer support.
While traditional savings accounts earn lower interest rates than high-yield or CD accounts, they’re a good fit if you value face-to-face banking and want your savings and other services under one roof.
High-Yield Savings Account
High-yield savings accounts typically offer interest rates significantly higher than traditional savings accounts—sometimes 10 to 15 times the national average. These accounts are most often provided by online banks, which can pass along savings from minimal operating costs in the form of better annual percentage yields for their customers.
While you may not have access to in-person support or bundled financial services, the trade-off is worth it if your priority is growing your balance as efficiently as possible.
Certificate of Deposit Account
A certificate of deposit (CD) account is a time-locked savings account that offers a very high APY in exchange for keeping your money untouched for a set period—typically anywhere from 6 months to 5 years. During this term, your funds are locked in, and early withdrawals typically result in a penalty fee. Once the term ends (called the “maturity date”), you can either withdraw your money, move it to another account, or roll it into a new CD.
Due to the guaranteed return and higher rates, CDs are often considered one of the best ways to grow your money, but they’re not ideal if you need quick access to your funds.
Money Market Account
A money market account is a hybrid savings account that typically offers higher interest rates than traditional accounts, along with limited-access features like check writing or a debit card. These accounts are often used for emergency funds or larger balances because they combine earning potential with some spending flexibility. Minimum balance requirements are usually higher for money market accounts, and some banks may limit the number of monthly withdrawals.
Specialty Savings Accounts
Specialty savings accounts are designed to help you save for specific goals or expenses, and many offer built-in tax advantages. Depending on your needs, you may choose from:
- Health Savings Accounts (HSAs) – Help you save for qualified medical expenses and reduce taxable income (available with high-deductible health plans).
- College Savings Plans – Let you grow savings tax-free when used for education-related costs like tuition and books.
- Flexible Spending Accounts (FSAs) – Offered through employers, these accounts let you use pre-tax dollars for health or dependent care.
- Bank-Offered Goal-Based Accounts – Some banks also offer labeled savings sub-accounts for specific goals like holidays, vacations, or big purchases.
Account Types Comparison Chart
Use this chart to compare the most common types of savings accounts at a glance:
| Account Type | Best For | Pros | Cons | Offered By |
| Traditional Savings | Beginners, branch-focused savers | -Physical bank access-Access to other services | -Lower interest rates-Possible fees | Traditional banks |
| High-Yield Savings | Earning higher interest | -Higher APYs -Often no fees | -Limited or no physical support | Online banks |
| Certificate of Deposit (CD) | Long-term savers who don’t need access | -Highest APYs -Fixed earnings | -Penalty for early withdrawal | Traditional & online banks |
| Money Market Account | Emergency funds, higher-balance savers | -Higher APYs than traditional savings-Access to check writing and debit cards | – Higher minimum balance requirements-May limit transactions | Traditional & online banks |
| Specialty Savings | Saving for health, education, or specific goals | -Tax advantages-Goal-specific features | -Restrictions on use-Setup can be more complex | Traditional & specialty institutions |
There’s never a wrong time to start saving, and at The Southern Bank, we’re here to help you grow your money and reach your goals with friendly, personalized service. Whether you’re looking for a simple savings account, a money market account with more flexibility, or a CD to grow long-term savings, explore our Personal Banking page to get started. For in-person service, stop by one of our local branches.