Choosing a savings account

Factors that determine the dollar yield on an account:

Interest rate (also called rate of return, or annual yield)

All money earned comes from this factor.

The following factors reduce money earned and can even turn it into a loss: Fees, charges, and penalties

  • Typically based on minimum balance requirements, or transaction fees.

 Balance requirements

  • Some accounts necessitate a definite balance before paying any interest.On money-market accounts, the majority of banks will pay different interest rates for different size
  • Balances. (Higher balance earns a higher rate.)

 Balance calculation method

  • Most calculate daily. Some use average of all daily balances.

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