Best Savings Accounts for Your Tax Refundpersonal finances | February 15, 2018 | By Susannah McQuitty
Planning on saving your tax refund for a rainy day? Good on you! Now it’s time to find out why you want to save that money, because that will help you decide what sort of savings account you’d like to use.
Different types of savings account yield different results. Maybe you’d trade brick-and-mortar convenience for a higher interest rate, or maybe having your account close to home is top priority. You might even consider starting a nice little nest egg — whatever your goals are, there’s a savings account to suit you.
Let’s look at a few different kinds of savings accounts that might be a good fit.
Online banks are just that — they’re only accessible through the internet, so the money saved from not having a physical location typically translates to higher interest rates for you. Higher interest rates mean you make money off your savings faster, and most online banks don’t have a minimum deposit to start an account.
Your money will generate more income if you don’t withdraw often, so online bank accounts are great to keep your refund out of sight, out of mind, and making money.
Personal savings accounts
If you want to keep your refund money a bit closer to home, check out your bank’s personal savings account options. The interest rates will likely be lower than online bank rates, but you can move money between accounts with ease. Some banks will even provide an overdraft service that will pull money from your savings account instead of charging overdraft fees and penalties.
Personal savings accounts are best for emergency funds and any other money you’d like to keep separate but readily available.
Off to the other end of the spectrum, you may want to use your refund to start a retirement savings account (or contribute to one you already have). If you don’t plan on using the money any time soon, it’s a great idea to start putting funds away for your golden years. The only drawback is that there are usually fees and penalties for withdrawing from a retirement savings account before you retire, so make sure you’ve budgeted as much of your refund as you need before stowing the rest away.