What to ask your bank about savings account features

When you open a savings account, the interest rate matters less than the fees and restrictions that will actually cost you money. Before you hand over your information, ask the bank or credit union directly about: how much you need to deposit to open the account, what the minimum balance requirement is (and what happens if you fall below it), how much interest the account pays, what fees they charge for monthly maintenance or falling short of the minimum, how many withdrawals you can make per month without a penalty, and whether there are any limits on how you can move money in or out.

The answers to these questions vary wildly between institutions. A bank that charges $15 a month for falling $100 short of a minimum balance will cost you far more over a year than an account paying 0.01% less interest. Similarly, an account that limits you to six withdrawals per month might work fine if you only visit an ATM once a week, but will hit you with fees if you need to access your money more often.

Key Takeaways

  • Ask about the minimum balance requirement and what fee you pay if your balance drops below it, because monthly maintenance fees can erase any interest you earn.
  • Find out how many withdrawals or transfers per month are included before fees kick in, especially if you plan to move money frequently.
  • Request the current interest rate in writing and ask whether it changes based on your balance or account activity.
  • Confirm whether the bank charges fees for using out-of-network ATMs, overdrafts, or closing the account early.
  • Ask if the account is FDIC-insured (at banks) or NCUA-insured (at credit unions) so your money is protected up to $250,000.

Minimum balance requirements and what they cost

Most savings accounts require you to keep a certain amount of money in the account at all times. This is called the minimum balance requirement, and it varies from zero dollars to several thousand. If your balance falls below that number, the bank charges a fee — often $5 to $15 per month.

Before you open an account, ask the bank: What is the minimum balance? Is it calculated on the lowest balance during the month, or the average balance? What happens the day your balance drops below it — do you get a warning, or does the fee post immediately? Some banks will waive the fee if you set up direct deposit or keep a linked checking account open with them, so ask about those exceptions too.

A high minimum balance requirement is only a problem if you cannot maintain it. If you have $500 to save and the account requires $1,000, you will pay a monthly fee until your balance grows. A no-minimum account costs nothing to keep open, even if you only have $50 in it.

Interest rates and how they change

The interest rate on a savings account tells you how much money the bank will pay you for letting them hold your money. Rates are quoted as an annual percentage yield, or APY. A 4.5% APY means that if you keep $1,000 in the account for a full year without touching it, you will earn $45 in interest.

When you call or visit a bank, ask for the current APY in writing. Then ask: Does this rate change? If so, how often? Is it may provide for any period, or can the bank lower it tomorrow? Some banks offer a promotional rate for new accounts that expires after three or six months, then drops to a much lower rate. Others adjust their rates weekly based on what the Federal Reserve does. Knowing which type of account you are opening prevents surprises later.

Also ask whether the rate depends on your balance. Some banks pay higher interest if you keep more than a certain amount in the account, and lower interest if you keep less. If you plan to save small amounts over time, confirm that the rate applies to whatever balance you actually have.

Withdrawal limits and transfer restrictions

Savings accounts are meant for money you do not touch often. Many banks limit how many times per month you can withdraw money or transfer it to another account without paying a fee. This limit is often six withdrawals per month, though some banks allow more and others allow fewer.

Ask the bank: How many withdrawals and transfers can I make per month before a fee applies? Does the limit include ATM withdrawals, or only transfers to other accounts? What is the fee if I exceed the limit? Some banks charge $10 per excess withdrawal; others close the account if you withdraw too often.

If you think you will need to move money in and out frequently, a savings account may not be the right tool. A money market account or a checking account might suit you better, though they typically pay lower interest. Ask the bank what account type they recommend if you need more flexibility.

Fees that are easy to miss

Beyond the monthly maintenance fee and withdrawal limits, banks charge fees for specific actions. Before you open an account, ask about: overdraft fees (charged if your account goes negative), out-of-network ATM fees (charged when you use an ATM that does not belong to the bank), early closure fees (charged if you close the account within a certain time, usually 90 days to a year), and inactivity fees (charged if you do not use the account for several months).

Some banks charge $3 to $5 per out-of-network ATM withdrawal. If you use an ATM twice a month and the bank has no branch near you, that is $72 to $120 per year in fees. Ask whether the bank has ATMs in locations you actually visit, or whether they reimburse out-of-network fees.

Overdraft fees are less common on savings accounts than on checking accounts, but they do happen. Ask whether the bank will refuse a withdrawal if your balance is too low, or whether they will let the account go negative and charge you a fee. The first option is safer.

Insurance and where your money is protected

When you put money in a bank, the Federal Deposit Insurance Corporation (FDIC) protects it up to $250,000 per account holder, per bank. If the bank fails, you get your money back. Credit unions offer the same protection through the National Credit Union Administration (NCUA).

Before you open an account, confirm that the institution is FDIC-insured or NCUA-insured. You can check this on the FDIC website or NCUA website by entering the bank or credit union name. If an institution is not insured, your money is at risk if the institution fails.

Also ask: If I have multiple accounts at the same bank, are they all insured separately, or does the $250,000 limit apply to all my accounts combined? Most banks combine all your savings accounts under one $250,000 limit, but checking accounts are usually separate. If you have more than $250,000 to save, you will need accounts at multiple institutions to keep all of it insured.

How to access your money and move it around

Ask the bank how you can move money in and out of the account. Can you transfer money online to another bank? Can you set up automatic transfers? Can you write checks? Can you use a debit card? Some savings accounts offer all of these options; others offer only online transfers and ATM withdrawals.

If you plan to move money frequently between this savings account and a checking account at the same bank, confirm that transfers are free and count toward your withdrawal limit. If you plan to transfer money to an account at a different bank, ask how long the transfer takes — usually one to three business days — and whether there is a fee.

Also ask whether you can deposit money by mail, mobile app, or ATM, or whether you have to visit a branch in person. If you do not live near a branch, online-only banks and credit unions may be your only option.

Frequently Asked Questions

What is the difference between a savings account and a money market account?

A money market account usually pays higher interest than a savings account but also requires a higher minimum balance and limits your withdrawals. Both are insured by the FDIC or NCUA. Ask your bank which one makes sense for the amount of money you plan to save and how often you need to access it.

Can a bank change the interest rate or fees after I open the account?

Yes. Banks can lower interest rates and raise fees with notice, usually 30 days. Ask the bank what their policy is on rate changes and whether they notify you by mail or email before a change takes effect. Some banks grandfather existing customers at the old rate for a period of time.

What happens if I close the account early?

Some banks charge an early closure fee if you close the account within 90 days to a year of opening it. Ask the bank what the fee is and whether it applies to your account. If you think you might need to close the account soon, choose a bank with no early closure fee.

Do I need to keep a minimum balance if I have direct deposit set up?

Many banks waive the minimum balance requirement if you set up direct deposit of your paycheck. Ask whether this waiver applies to your account and whether the direct deposit needs to be a certain amount or frequency.

Is my money safe if the bank fails?

Yes, up to $250,000 per account holder per bank, as long as the bank is FDIC-insured. Credit unions offer the same protection through the NCUA. You can verify that your bank is insured on the FDIC or NCUA website before you open an account.