The Wisconsin Bankers Association offers for your use the following consumer education column. Your bank is free to use this as a community column in your local newspaper, a letter to the editor, a press release or in any other way you see fit. The purpose is to give our members an easy-to-use tool for promoting the banking industry to Wisconsin's communities.

A savings account is the most fundamental way most adults choose to save money. It's the safest place to "store" your hard-earned funds, after all! However, not all savings accounts are alike, and sometimes choosing the best one for you is confusing. Read on for three common questions about savings accounts and their answers!

How important is it to find the best interest rate? Shopping around for a competitive interest rate on your savings account used to be the primary way to pick a savings account. But it's also important to look at factors such as minimum balance requirements, withdrawal limits, and if there are any service fees. Depending on your financial goals and how you plan to use the account, any of those factors may be more important than the interest rate-especially with interest rates at historic lows. 

What is a money market account? Money market accounts (MMAs) are similar to traditional savings accounts, but they have different rules regarding what the bank can do with the money you deposit. With a traditional account, the bank will only use your funds to make loans; with an MMA, the bank can put your funds into low-risk investments (including government securities and CDs). Both accounts are federally insured, so you will never lose that money. The advantage of opening an MMA is that they typically offer higher interest rates than traditional savings accounts, but they also come with higher minimum balance requirements.

Why can't I withdraw money from my account more than six times per month? It's your money, so you should be able to make as many withdrawals as you want, right? Not quite. A federal rule called Regulation D (or "Reg D" in banking industry lingo) requires banks and credit unions to limit transactions on savings accounts by charging fees for transactions over the limit or by converting those savings accounts into checking accounts. Why? Reg D is the federal government's way of ensuring that banks have the proper amount of reserves on hand. Also, savings accounts are intended to help you save money, not spend it. 

If you have specific questions about the best savings account option for you, talk to your local banker!

An archive of Consumer Columns is available here on WBA's website

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