Keep emergency money in a savings account, as well as money that you are saving for an upcoming large purchase, such as a tuition payment or a vacation. The money you put in a savings account won’t be quite as easy to spend as the money in a checking account, but will earn interest or dividends.

Are all savings accounts created equal? No. Look for the account/institution that will best meet your needs. There is a good chance that your local credit union can offer you higher interest rates than a bank will. Compare accounts, and ask the following questions.

• Is the institution insured? Credit unions should be insured by the NCUSIF, and every credit union in Michigan is. A bank should have Federal Deposit Insurance Corp. (FDIC) insurance.
• What is the dividend/interest rate? Savings accounts generally have lower interest rates than other investments, but you’ll still want to look for the best return you can get on your account. Some of the things you’ll want to know are:
• What’s the annual percentage yield (APY)? The APY tells you how much your money can earn based on interest rate and frequency of compounding. The Truth in Savings Act requires all institutions to disclose APY, so consumers can compare accounts on an apples-to-apples basis.
• Does the institution offer tiered rates? Tiered rates apply to different balance amounts. If tiered rates apply, find out how.
• How often is interest compounded? Monthly? Quarterly?
• What is the minimum balance required?
• What fees apply to the savings account?
• Is there a charge if my account falls below a minimum balance?
• Is there a fee for closing the account?
• Is there a monthly maintenance fee?
• Am I required to use direct deposit in order to get a free account or reduced fees?
• Is there a limit on the dollar amount or number of transactions I can make?

Use our checklist to compare savings accounts.

Savings Account Comparison