If opening a new savings account is unfamiliar territory for you, it’s normal for you to have a few questions. And of all those questions, one of the most common is: can you open a savings account without a checking account?
In short, yes, you can open a savings account without opening a checking account. In fact, this can be an effective money-saving tactic. By not linking a checking account to your savings account, it can limit your exposure to your savings, and therefore, reduce your temptation to spend it.
We refer to this as “isolating your savings”, and it is one the money-saving tips we recommend the most.
But here’s the thing, if you’re going to open a savings account without a checking account, there are a few things you should consider.
Since many savings accounts will charge you fees if you don’t meet certain requirements, (for example, linking a checking account), it’s important to do your research, and read the fine print. So what, exactly, should you look for in a savings account? And what are the main benefits to opening a savings account without a checking account?
Well, that’s exactly what I’m about to cover.
By The Way: Here at Be The Budget, we take saving money pretty seriously. And, if you’ve stumbled upon this article because you’re on the hunt for a great savings account, we recommend opening an Axos High Yield Savings. With no monthly maintenance fees, no minimum balance requirements, and a great interest rate, this savings account checks all the boxes.
What To Look For In A Savings Account
If I’m being honest there are quite a few important things to look for when you open a savings account. In other words, this isn’t a decision that you should take lightly.
The way I see it is, if you’re going to open a savings account and fill it with money, you should find an account that benefits your efforts.
In fact, what follows are 5 of the most important things you should look for when researching and/or opening a savings account.
1. Good Interest Rate
Whether you’re opening a savings account to build an emergency fund, save for vacations, save for a house, or any other purpose, the first thing you should look for is a decent interest rate.
I mean, why would you open an account that earns a 0.1% interest rate when you could open an account that earns 5X, 10X, or maybe even more than that?
Seriously, opting for a savings account that earns a decent interest rate can add up to hundreds of dollars per year. And the more money you put into savings, the more important your interest rate becomes.
2. No Monthly Maintenance Fees
Another equally important thing for you to look for when opening a savings account, is no monthly maintenance fees. After all, what’s the point of earning a great interest rate if you’re going to lose all of it–or at least a large portion of it–to monthly fees.
In other words, if you’re earning $15 per month in interest, but you have to pay $15 in maintenance fees, then there is really no point to earning that interest. In that case, you’d be better off opening an account that earns 0.1% interest that doesn’t charge any fees. (Sad, I know.)
Remember, the reason you’re putting your money into a savings account–not a tin can under your bed at home–is because you want your money to grow. So, when researching savings accounts, make sure you won’t be charged monthly maintenance fees.
Otherwise, there’s a good chance your savings account will actually be costing you money.
3. No Minimum Balance Requirements
Along the same lines as the monthly maintenance fee, another thing you should look for when opening a savings account is: no monthly minimum balance requirements.
Though, depending on the purpose of the savings account you’re opening, this may or may not be that important.
For instance, if you are opening a savings account to serve as an emergency fund, and you have to maintain a minimum monthly balance of $100, chances are, you will never dip below that amount. You’ll probably have thousands of dollars sitting in there at any one time, so the $100 minimum isn’t a big deal at all.
On the flip side, if you’re opening an account to serve as a vacation savings fund, avoiding a minimum balance requirement should be a bigger deal. I mean, if you’re using the money to pay for a few vacations each year, there’s a good chance you will dip below that minimum balance threshold. And when that happens, you don’t want to get hit with a monthly fee.
4. Mobile Banking
These days, at least in my opinion, mobile banking should be an absolute requirement when opening a savings account. Moreover, it should be intuitive, and a quality user experience.
Seriously, I have dealt with mobile banking that was difficult to use, and it is a giant pain in the rear end. In fact, I’ve even had it drive me to switch to an entirely new bank.
It might not seem like a big deal when you’re opening an account, but over time, a bad mobile banking experience gets very old.
5. Mobile Check Deposit
I want to clarify something, just because a savings account offers mobile banking, doesn’t mean they offer mobile check deposits. This is a sneaky little thing that you need to look out for.
Now, I realize this might not be as important to you as it is to me. However, if you’re going to open an account, you might as well find one that offers this convenient service.
I mean, who really wants to drive to the bank when you could just snap a photo and carry on with your day?
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Benefits Of Opening A Savings Account Without A Checking Account
As I mentioned earlier, opening a savings account without a checking account is one of the money-saving tips we recommend the most.
But what exactly makes this such a beneficial thing to do? Well, to put it in the simplest terms, it can help you save a lot more money.
Well, here’s a couple reasons.
Out Of Sight, Out Of Mind
Whenever you put money into a savings account that isn’t linked to a checking account at the same bank, your money becomes slightly less visible.
And that can seriously reduce your temptation to dip into your savings and spend it on things that don’t benefit your long-term financial goals.
Think about it like this, if every time you log into your checking account–whether you’re tracking your spending, logging expenses into a budget, or just popping in to see how things look–you also see a big pile of savings, it can be hard not to pull that money out and spend it.
On the other hand, if your savings is sitting in a completely different bank, your money will be out of sight, and therefore, you will be less tempted to spend it.
Along those same lines, if you want to transfer money out of a savings account that isn’t linked to a checking account at the same bank, it can take a few days. This adds a slight layer of inconvenience, which is usually enough to keep you from spending your savings impulsively.
In contrast, if your savings account is connected to a checking account, you can transfer the money back and forth without much delay. And those nearly instant transfers can seriously blur the lines between the money you designate for savings, and the money you designate for spending.
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Not only is it possible to open a savings account without a checking account, it may actually help your money-saving efforts.
Just remember, when opening a savings account, make sure it meets the following criteria:
- Good Interest Rate
- No Monthly Maintenance Fees
- No Minimum Balance Requirements (Unless you plan to keep more than enough savings in it to avoid a monthly fee.)
- Mobile Banking
- Mobile Check Deposits
Oh, and as I mentioned at the beginning of this article, if you’re looking for a savings account that checks all these boxes, we recommend opening an Axos High Yield Savings.
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