Bottom Line Up Front
- Opening a savings account is a great step toward better financial health – such as being able to establish an emergency fund.
- Saving accounts keep your money protected and are a great way to earn dividends to help your money grow faster.
- Make saving simpler by setting up automatic transfers.
Are you ready to start saving? Taking small steps to build your savings now can help you prepare for the future. If you’re looking to start an emergency fund, save for a vacation or just get a handle on spending, opening a savings account can be a helpful tool.
Savings Account Benefits
The first thing to do before opening your account is to understand exactly what you’re getting. A savings account has many benefits. Here are a few:
- Security. A savings account can be one of the safest places to keep your money. If your account is with a credit union, federal insurance protects members up to $250,000 per account. Keeping cash at home, instead of with an insured financial institution, doesn’t offer similar protection.
- Dividends. When you deposit money into a savings account, your money earns dividends. Dividends are the earnings a financial institution pays on the balance in a savings account, money market account or certificate. The annual percentage yield (APY) is the rate of return that your saving account will earn over one year. The money you save grows faster with the power of compounding dividends, because your dividends are reinvested and earn more dividends.
- Safety net. By setting aside a portion of your money as savings, you’re creating a nest egg to draw from in case of emergency or to help fund short- and medium-term goals like purchasing a car or going on a vacation. There are even special savings accounts that can help you save for long-term goals like retirement.
What Account Features Are Important to You?
With an understanding of how a savings account can work for your benefit, you can focus on the features that fit your needs.
- Digital access. Most financial institutions offer mobile and online * account access, but the exact features may vary. Look for options that are important to you, such as mobile check deposit, an easy-to-use app or free money transfers.
- Liquidity. Liquidity means having quick access to your cash. If a financial emergency strikes, you’ll want easy access to your money. Look for savings accounts that allow withdrawals and transfers via multiple channels, such as in-person, at an ATM and online.
- Competitive dividend or interest rate. Compare rates from different financial institutions. Also look at how often the interest is compounded. You can earn more when interest is compounded every month, compared with annually. Check out the savings rates available with Navy Federal Credit Union.
- Automatic saving. It’s easy to make saving a habit. For example, if you use direct deposit for your paycheck, you can have a portion of it automatically deposited into your savings account. Your financial institution may also allow you to set up a regular automatic transfer from your checking to savings accounts.
Ready to Open an Account?
The first time you open an account at a financial institution, whether online or in-person, you’ll generally need:
- Government-Issued Photo ID. Examples include a driver’s license, passport or military ID.
- Personal information. Social Security number, date of birth, home address and phone number. For credit unions, you’ll also need to be eligible for their membership.
- Initial minimum deposit. Typically $25 to $100, depending on the financial institution. Navy Federal requires a minimum deposit of just $5 when you become a member and open a savings account.
If you’re interested in opening a savings account at Navy Federal Credit Union, you need to be a member. Check your eligibility and join today, then start searching for the right savings account for you.