Savings Vehicles: Insured Or Not?

Are savings vehicles ever insured? The short answer is yes. While one source states that savings vehicles are never insured, this is not true of all savings vehicles. For example, money market accounts are federally insured, with funds protected by the FDIC or NCUA at most financial institutions for up to $250,000. Similarly, savings accounts can be insured by the FDIC or NCUA, depending on the bank. Certificates of Deposit (CDs) are another type of savings vehicle, and these are insured by the FDIC.

Money Market Accounts

Some popular money market accounts include:

• Vio Bank Cornerstone Money Market Account
• UFB Direct Preferred Money Market Account
• CFG Community Bank High Yield Money Market Account
• Quontic Bank Money Market Account
• Sallie Mae Bank Money Market Account
• Ally Bank Money Market Account

High-Interest Rate Savings Accounts

• BrioDirect High Yield Savings Account: 5.30% APY, $5,000 minimum opening deposit, no monthly maintenance fee, ATM access
• Ivy Bank High-Yield Savings Account: 5.30% APY, $2,5000 minimum opening deposit, no monthly maintenance fee
• TAB Bank High Yield Savings: 5.27% APY, no minimum opening deposit, no monthly maintenance fee, ATM access
• UFB Secure Savings: Up to 5.25% APY, no minimum opening deposit, no monthly maintenance fee, ATM access
• Laurel Road High Yield Savings: 5.15% APY, no fees or minimums, also offers enticing checking accounts
• Varo Savings Account: 3.00% to 5.00% APY, no service fees, potential for a high APY, tools to automate transfers

Online-Only Savings Accounts

SoFi Checking and Savings

SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum balance requirement, and there is no monthly maintenance fee.

CIT Bank Platinum Savings

This savings account pays 5.00% APY on balances of $5,000 or more. If your balance dips below $5,000, it earns a much lower 0.25% APY. The account has no monthly fee, and the minimum opening deposit is only $100.

American Express High Yield Savings Account

The well-known credit card company offers a savings account with a competitive yield, a $0 monthly fee, and a $0 minimum balance requirement. If you like to earn interest on all your bank balances, American Express also offers a competitive rewards checking account.

EverBank Performance Savings

The EverBank savings account earns a competitive APY, and there is no minimum to open an account and no monthly fee. The bank also offers an interest-checking account with ATM fee reimbursements.

Barclays Online Savings Account

Barclays’ savings account offers a solid interest rate, and there are no monthly fees or minimum balance requirements. The account also has a tool for setting savings goals.

Savings Accounts as Overdraft Protection

Savings accounts can be used as overdraft protection, which is a service provided by banks to help cover transactions when there are insufficient funds in a checking account. This is done by linking the checking account to a savings account, which then allows funds to be automatically transferred to cover any overdrafts. This is a convenient way to avoid overdraft fees, which are typically charged per transaction and can quickly add up.

Overdraft protection is a useful tool for those who want to avoid the embarrassment of having their card declined or worry about bounced checks. It can also be helpful in emergencies when one needs access to additional funds. However, it is important to note that overdraft protection usually comes with its own set of fees and may not be suitable for everyone. Some banks charge a fee for each overdraft protection transfer, and transactions may be declined if there are insufficient funds in the linked savings account. Additionally, overdraft protection may encourage overspending for those who are not careful with their finances.

To set up overdraft protection, one can link their checking account to a savings account, a line of credit, or a credit card. The linked account will then be used to cover any transactions that would otherwise result in an overdraft. It is important to note that using a line of credit or credit card for overdraft protection may incur additional fees and interest charges.

While overdraft protection can be a helpful tool, it is not the only way to avoid overdraft fees. One can also choose to simply not opt in for overdraft coverage, in which case the bank will decline a transaction if there are insufficient funds. Another option is to switch to a bank or credit union that offers more consumer-friendly overdraft programs, such as allowing customers to overdraw up to a certain amount without any fees. Additionally, budgeting apps and account alerts can help individuals closely monitor their spending and avoid overdrafts.

Savings Account Promotions

Savings accounts are insured by the federal government, with the FDIC insuring banks and the NCUA insuring credit unions in the US. In Canada, savings accounts are usually federally protected by the Canadian Deposit Insurance Corporation (CDIC).

Savings accounts are a great way to store your money safely and grow it by earning interest on your deposits. They are a short-term investment vehicle to help grow your savings with no risk. The money you deposit in a savings account is "liquid", meaning it is accessible and can be withdrawn at any time.

• Introductory interest rates and cash bonuses: Keep an eye out for special offers like introductory interest rates and cash bonuses, but be aware that another savings account without those gimmicks might earn you more interest over time.
• Free transactions: Better extras to look for are free transactions, free Interac® e-Transfers, and better online/mobile banking experiences.
• No monthly fees: There are many great high-interest savings accounts available that don't charge monthly fees even if you don't have a lot of money saved.
• High-interest rates: Some institutions offer higher-yield rates (e.g., 2.00% APY or 3.00% APY) in exchange for a deeper financial commitment, such as enrolling in a health plan through the bank or using another of the bank's products.
• Promotional rates: Some banks offer promotional rates for a limited time to attract new customers, such as Wells Fargo's $525 bonus offer for new customers.

Frequently asked questions