Is a Savings Account Worth It? A Beginner’s Guide to Savings

Everyone should learn how to start saving their money at an early age. They also need to understand the right way to save. There are many types of savings tools and financial products that can help your money grow. Most people start with an old-fashioned savings account. However, with the variety of interest-bearing accounts and investments available, is a savings account worth it?

Why a Savings Account Is Worth It

Starting with a simple savings account is the easiest way to learn how to save. While the old savings books are a thing of the past, there are still savings accounts available for kids to teach them the value of money and how to save. Opening a savings account is an excellent way to learn how to save for what you want.

What is the benefit of a savings account as you get older? It is an ideal place to set aside an emergency fund. You'll be glad to have a nest egg if you have a household emergency, a medical emergency, or even a cash crisis, such as losing your job.

Having money in the bank gives you a sense of security. While you may not want to count on a savings account for your retirement fund or other financial needs, it’s a great place to start.

Start with a Savings Account

A savings account can be the start of your savings plan, but you should know what to look for when opening a savings account.

A savings account isn’t meant to hold the money you use every day. Some banks and credit unions limit the number of monthly withdrawals you can make from your savings; however, you always have access to your money. 

When shopping for a savings account, you want to look for the best interest rate. Interest rates or annual percentage yields (APYs) typically follow the interest rates set by the Federal Reserve. Interest rates also tend to climb when banks and credit unions are looking to attract more deposits.

You may also want to look for other features. For example, some financial institutions offer overdraft protection, which uses the money in your savings account to cover shortfalls in your checking account. Some banks and credit unions also have special features to help you save, such as automatically scheduling a transfer of funds from checking to savings each month. iQ Credit Union also offers Easy Saver, which rounds every debit card transaction to the nearest dollar and deposits the difference in your checking account.

Understanding Your Savings Options

There are many ways to save money, and banks and credit unions offer many savings products. Understanding your savings options will make choosing the right account to meet your needs easier.

High-Yield Savings Account

A high-yield savings account is a type of savings account that offers a higher interest rate than regular savings options tend to. This allows you to grow your money more efficiently while keeping it accessible, making it an ideal option for an emergency savings account.

Money Market Account

A money market account is another type of interest-bearing account that usually pays a slightly higher rate than a savings account and offers limited check writing. There are often restrictions with a money market, such as a minimum balance to avoid fees.

Certificate of Deposit (CD)

A CD pays interest on a lump sum set aside for a preset time. CDs usually offer higher interest rates in return for leaving your money on deposit for the term of the CD. Early withdrawal requires paying a penalty. CDs are helpful for planning for future spending, such as a down payment on a car or college tuition.

IRAs and Retirement Investments

Individual retirement accounts (IRAs) and investments are used for retirement savings. The goal is to set aside money that will accumulate interest until you are ready to retire. There are different types of IRAs, but they usually offer a means of tax-deferred savings. When money is wisely invested, it normally yields a higher return than other types of savings, but you should work with a  financial advisor to form an investment strategy.


These are the most common ways to save money, but most people start with a savings account, then transfer money into other savings products. The key to an effective savings strategy is diversification. You don’t want to rely on one or two savings accounts to achieve your financial goals, but put your money to work using multiple saving strategies.

To get started, build savings into your household budget. Allocate part of your monthly earnings for savings and transfer that amount into your savings account. As the money accumulates, you can consider ways to use it as part of your diversified savings strategy.

Ways to Expand Your Savings Strategy

While a savings account is a good tool to get you started, there are other types of accounts to expand your savings strategy.

Many banks and credit unions pay interest on checking accounts. For example, iQ Credit Union offers Intelligent Checking, which offers a competitive APY. With interest checking, you earn interest on every deposit, and there is no limit to the number of withdrawals. Many depositors use interest checking and savings together to manage their money, using the money in the savings account for a rainy day.

So when you ask yourself, “Is a savings account worth it?” consider the advantages. A savings account is easy to set up, and you can use it to establish a financial foundation for the future. Savings accounts provide interest on your deposits and are fully insured by the FDIC or the NCUA, unlike investments or other savings strategies. As your savings grow, you will have excess cash to apply to retirement or other savings plans that offer a higher yield.

If you want to learn more about savings strategies and how to get started, be sure to get The Ultimate Guide to Simple Savings or stop by your local iQ Credit Union. We’re always happy to help.


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