Money Management

Adding a dog to your family can be a rewarding experience. But ensure you can afford to care for them. Find out how pet insurance may help and what it costs. [[{“value”:”

Dogs make great pets, so it’s no surprise that so many people choose to adopt them. A dog is an excellent choice if you want a furry companion to spoil. But before adopting any pet, it’s essential to consider your financial situation to ensure you can properly care for your new pal.

Some pet parents invest in pet insurance to help cover the cost of care. If you’re considering bringing a dog home from your local shelter, you may want to research pet insurance policies first. Let’s take a closer look at how much dog parents are spending on pet insurance.

Pet insurance is an additional expense to consider

There are many costs associated with owning a dog. While you’re not required to purchase pet insurance, it can be helpful. Pet owners can use their pet insurance policies to get reimbursed for eligible pet expenses, like medical costs. You may feel more peace of mind investing in insurance before adopting a dog. Insurance coverage can vary, so compare policies and research multiple pet insurance companies to find the right coverage for your pet.

Fur parents are spending up to $1,200 each year on insurance for their dogs

Rover’s The Cost of Dog Parenthood in 2024 examined how much the average pet owner is spending on dog care. The study examined various costs, including pet insurance. According to the study, 45% of dog owners have pet insurance. An impressive 93% of those who carry pet insurance feel the expense is worth it.

How much are dog moms and dads paying for pet insurance? They pay between $10 and $100 monthly or $120 to $1,200 annually to insure their dogs. That’s quite a vast range, but it shows that pet insurance can be pricey. It’s wise to carefully research pet insurance options and policy prices before buying coverage to know what to expect.

A pet illness or emergency can significantly impact your wallet

No one expects their dog to get sick or have an emergency. But, unfortunately, these situations happen and often occur when we least expect them. You’ll want to feel confident that you can provide them with the best care possible if they need your help.

If you don’t have a sizable emergency fund, dealing with the cost of an emergency visit to the vet can be stressful. The last thing you want to face is the added stress of an expensive credit card bill. You may risk accumulating credit card debt if you don’t pay the entire statement balance. The good news is you can prepare before you find yourself with an unexpected vet bill.

Many soon-to-be pet owners invest in a pet insurance policy before adopting a new friend. With the right pet insurance policy, you can feel less financial stress if you ever have to deal with a pet emergency. This can allow you to fully focus your time and attention on your pet’s needs.

Dogs are a commitment

Dogs are very loving creatures, and they make great family members. But make sure you’re not making an impulsive decision. Research from Rover shows that the cost of dog care can total $870 to $4,565 during the first year of ownership.

Before becoming a dog mom or dad, the best strategy is to review your personal finances and research average dog care costs before bringing your new furry family member home. For more information about pet insurance, check out our free pet insurance resources.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Kirkland Signature products from Costco can save you money without sacrificing on quality. Find out which 10 Kirkland Products you should try next. [[{“value”:”

Costco Kirkland Signature products are legendary for their high quality, low price, and immense variety.

In fact, although they’re considered a generic brand, many Costco Kirkland products are actually well-known brands in disguise. For example, Duracell produces Kirkland batteries, and Starbucks supplies its House Blend coffee.

While it’s not hard to find Kirkland Signature products, it can be difficult to know which are the best savings opportunities. To help you decide which Kirkland products to try next, here are 10 I’ve never regretted buying.

1. Paper towels

Online price: $22.99

Costco’s Kirkland Premium Towels are thick, sturdy, and cheap. I use them for minor spills and accidents, like cleaning up our cats’ hairballs, as well to pat-dry fish and chicken. They’re not as strong as some brands, like Bounty, but they can get the job done at a good price. You’ll pay about $1.20 for 100 sheets of Kirkland paper towels, which is cheaper than Kroger Paper Towels ($1.30 for 100 sheets) and Amazon’s Presto! Brand ($1.77 per 100 sheets).

2. Kitchen trash bags

Online price: $19.99

Nobody likes taking out the trash only to realize they don’t have another garbage bag to replace it. Thankfully, Costco’s Kirkland Kitchen Trash Bags are packaged with 200 bags, helping you cut down on the trips to the grocery store to buy this essential product. Plus, the price is a steal. At $19.99 for 200, you’re paying about $0.10 a bag. If you were to buy the same kind of trash bag at Walmart (13 gallons), you would pay between $0.17 and $0.20 a pop, plus you’d get fewer bags per package.

3. Gasoline

Price varies by location

There’s almost no competition with Kirkland Gasoline. If you’re looking for the cheapest gas prices (at the highest quality), 9.9 times out of 10, you’ll find it at Costco (Sam’s Club drives a hard bargain, too). Not only that, but Costco also offers TOP TIER™ gasoline, which, according to AAA research, is said to be cleaner and more efficient than brands that do not fall into that elite category.

4. Shelled pistachios

Online price: $16.99

This has long been one of my favorite Kirkland products. You can buy a 1.5-pound bag of these emerald delicacies for $16.99, or roughly $11.33 per pound. For comparison, Walmart sells pistachios at about $13.31 per pound, Kroger sells them at $12 a pound, and Amazon also sells them at $12 per pound.

5. Adult multivitamin gummies

Online price: $16.99

The Kirkland Signature Adult Multivitamin has 160 gummies per bottle and are sold in packs of two. The price is decent — $0.05 per gummy — which is the same as Amazon but slightly more expensive than Walmart ($0.046). That said, pay close attention to the dosage of vitamins in each vitamin package, as Costco’s brand typically has higher values. For example, the Kirkland Signature gummies have 750 mcg of Vitamin A, 30 mg of Vitamin C, and 20 mcg of Vitamin D, while Walmart’s brand has 390 mcg, 60 mg, and 10 mcg of the same vitamins.

6. Almond butter

Online price: $7.99

Don’t even get me started on the Kirkland Creamy Almond Butter. I use this for toast, smoothies, toppings for carrots and celery, and just as a snack off the spoon. The quality is excellent. It’s creamy but doesn’t leave you with that fatigued feeling that some heavily sugared peanut butters induce. Combine this with some Kirkland Strawberry spread, and you’ll have yourself a good AB&J.

7. Bacon crumbles

Online price: $10.99

No “best-of” list would be complete without mention of Kirkland Signature bacon. And while most loyal Costco fans are familiar with the company’s bacon strips (deemed the overall best-tasting bacon by Consumer Reports), its Bacon Crumbles also deserves an honorary mention. Not only do they taste good, but the price is deliciously low: $10.99 for a 20-ounce bag. Use them for salads, baked potatoes, casseroles, or just as a snack.

8. Organic raw honey

Online price: $17.99

Another Kirkland classic, Costco sells organic raw honey in packs of three 24-ounce jars shaped like cute, harmless bears. As a regular consumer of this honey, I can testify that it’s Grade-A and can excite the taste buds like some fancier, “straight-from-the-hive” products. Plus, at $17.99, you’re paying about $0.25 an ounce, which is cheaper than Amazon ($0.56 an ounce) and Walmart ($0.40 an ounce).

9. Extra virgin Italian olive oil

Online price: $21.99

This is by far one of my most-purchased Kirkland Signature products. I’m pretty snobby when it comes to what oils we use when we’re cooking, but none of Costco’s olive oils — including its Spanish and Organic Olive Oil — have disappointed me. Truthfully, the price difference between this and Walmart’s Great Value olive oil isn’t substantial ($0.325 per fluid ounce at Costco versus $0.326 at Walmart), but I like the taste of Costco’s olive oil more (like I said, I’m a snob).

10. Variety snack box

Price: $32.99

For about $33, you can buy a box of 51 single-serving snacks, like granola bars, trail mix, almonds, cashews, peanuts, and nut bars. This can be perfect for kids’ lunches or your own snacks during the day. Although this would probably be lethal if you’re allergic to nuts, it’s definitely worth the price if you count them as one of your favorite snacks.

All things considered, you’re going to find a lot of great Kirkland Signature products at Costco, many of which can help you plan for your personal finances. Next time you’re at Costco, check out these 10 products and see if they don’t make it on your list of personal favorites.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Starbucks, and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.

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CDs can be a great way to lock in an interest rate on your savings. Keep reading for important facts about CDs. [[{“value”:”

Certificates of deposit, or CDs, allow you to lock in an interest rate on your savings for a certain amount of time. This is especially true in the current environment, where CD yields are higher than they’ve been in years.

However, while the concept of CD yield is well-known by most Americans, there’s a lot more to know about this type of bank account that many people aren’t familiar with. For example, did you know that some banks require thousands of dollars to open a CD, while others don’t? And some CDs might be better for creating an income stream than others.

With that in mind, here are 10 particularly important things to keep in mind as you’re deciding whether a CD is the best place to park your cash.

1. You can be penalized for early withdrawals

This isn’t exactly a secret, but it’s worth mentioning. If you open a CD, your money isn’t necessarily locked down at the bank for the entire term — but you’ll pay a penalty if you take it out early. In most cases, the penalty is equal to a few months’ worth of interest, and it tends to be worse for long-term CDs than short-term ones.

As an example, an early withdrawal might cost you three months of simple interest, so if you have $10,000 in a CD at a 5% interest rate, pulling your money out early could cost you $125. In certain cases (such as financial hardship) banks may waive CD penalties, but this is rare.

2. There are special CDs that could be appealing

Some banks offer non-standard CD products that might be a good fit for your needs. For example, there are a few banks that offer no-penalty CDs, which allow you to lock in an APY for a certain number of months but won’t penalize you if you take your money out early.

There are also step-up CDs (banks may have different names for them) that allow you to adjust your interest rate at any one time during the term. In other words, if you get a step-up CD at a 5% APY and a few months later, the bank is offering a 6% APY on the same CD, you can choose to have your rate reset to the latter.

3. APY is only one part of the equation

If annual percentage yield (APY) was the only factor to consider, choosing a CD would be easy. But it isn’t. Also consider the following:

Does the bank offer other products that you use or are interested in? It can be convenient to keep your financial accounts in one place.How often does interest compound on the account?How easy is it to manage the account? Does the bank have an excellent mobile app, branches, or other ways to easily get help if you need it?

4. Many banks have minimum deposit requirements

Most online banks have done away with minimum deposit requirements for checking and savings accounts, but many still use them for CDs. The banks on our list of the best CDs have minimum deposit requirements that range from $0 to $2,500, so if you are using a relatively small amount of money to open your first CD, be sure the bank you choose has a minimum that works for you.

5. CDs come in standard term lengths (and some others)

The standard term lengths for CDs are six months, nine months, one year, 18 months, 24 months, three years, four years, and five years. Most banks with CDs offer these terms. Some banks offer non-standard term lengths (say, 13 or 17 months), and in some cases these “promotional” terms are where you can find the highest yields.

You might also be able to find CDs with significantly longer terms. We’ve found CDs with maturity terms as long as 10 years, and these could be appealing to individuals who want a steady income stream for a long time.

6. Some CDs let you withdraw interest

You can’t withdraw the money you deposit into a CD without penalty until it matures. However, some banks allow customers to withdraw the interest income that is paid into the account. Not all banks offer this, but it can make CDs a great tool to create a reliable income stream in retirement.

7. CDs are FDIC insured

As long as a CD is offered by a legitimate financial institution, it receives the same FDIC insurance as a checking or savings account. Money in a CD at an FDIC-insured bank is protected up to $250,000 per person. And if that isn’t enough, you can open CDs at different banks to make sure all of your money is safe.

8. CDs automatically renew

You might be surprised to learn that when your CD term expires, the account will automatically renew for another term (usually of the same length) unless you take action. Most CDs have a certain time window prior to expiration where you can choose to not renew, and one week is a common grace period. But if you don’t take action, it will renew at whatever the bank’s current APY is at the time.

9. CD interest is taxable

One important thing to know is that the interest paid to you by a CD is considered taxable interest income, even if you don’t withdraw it. In other words, if you put $10,000 in a 2-year CD at a 5.00% APY, you’ll receive $500 in interest income in the first year. And even if you leave it in the account to compound, you can still expect to receive a tax document at the end of the year.

10. You can open CDs in an IRA

As mentioned, CD interest is taxable income. But there’s a way around it.

By opening a CD within your individual retirement account, or IRA, you won’t pay tax on the interest income you receive each year. If you own your CD in a traditional IRA, you can get a tax deduction for your contribution, but eventual withdrawals from the account will be taxable income. With a Roth IRA, you won’t get an initial tax break, but your interest income and eventual withdrawals can be completely tax free.

The bottom line

As you can see, there’s more to CDs than simply opening an account, depositing money, and sitting back and collecting interest. CDs can certainly be a great idea for many people, but it’s important to know exactly what you’re getting into first.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Nearly a quarter of investors own crypto. Find out which generation is the most likely to invest and if you should add it to your own portfolio. [[{“value”:”

Cryptocurrency may be controversial, but it has also become one of the most popular investment types. Nearly one-quarter (24%) of investors own crypto, according to a recent investing study by The Motley Fool. That puts it ahead of bonds, index funds, and several other investment products.

Not every age range feels the same about crypto. Here’s a look at which generation is most likely to invest in it and how to decide if you should do the same.

The generation most likely to invest in crypto

Millennials are the generation most likely to invest in crypto, and it’s not a close race. Here’s the percentage of each generation that said they own cryptocurrency:

Gen Z: 22%Millennials: 43%Gen X: 23%Baby boomers: 8%

Cryptocurrency is a relatively recent investment option, so for the most part, these results are what you’d expect. Millennials are much more open to it than any other group, and baby boomers largely avoid it. The biggest surprise is Gen Z. As a whole, these young investors seem to be far more skeptical about crypto than millennials.

Is investing in crypto a good idea?

Cryptocurrency investing is a rollercoaster. These are extremely volatile assets, so large price swings are par for the course. Some large cryptocurrencies have failed entirely, with Terraform’s Luna being one notable example. There have also been crypto exchanges, including FTX, that have gone under.

The bottom line is that crypto is a high-risk investment. It could be high-reward, too, but don’t buy in expecting it to make you rich.

Because of how unpredictable and unproven crypto is, it shouldn’t be your only investment or make up a large part of your portfolio. But there’s nothing wrong with investing in it if you believe it has potential or you want to dabble in something more exciting. If you decide to invest, here are a few smart rules to protect yourself:

Don’t put more than 5% of your portfolio in crypto. For example, if you have $20,000 in investments, stick to $1,000 or less in cryptocurrency. Any higher, and you’re taking on too much risk with your investments.Keep most of your money in safer investments. Stocks are one of the best options. The stock market has historically averaged a return of about 10% per year over the last 50-plus years.Only invest money you can afford to lose. This way, you won’t be in financial trouble if your investment drops in value, which happens often with crypto.Plan to buy and hold for at least five to 10 years. The cryptocurrency market has gone through several bull and bear cycles. You’re more likely to be successful if you’re willing to wait out down periods.

How to get started with cryptocurrency

Now that the SEC has approved Bitcoin (BTC) ETFs, it’s easier than ever to invest in crypto. If you already have an account with a stock broker, check if it offers cryptocurrencies or Bitcoin ETFs. If so, the most convenient option would be to invest through your current brokerage account.

The other option is to open an account with a crypto trading platform. You can compare the top options on The Ascent’s list of the best crypto exchanges and apps.

You’ll also need to decide which cryptocurrencies you want to buy. Bitcoin was the first cryptocurrency and, while still risky, is lower risk than other cryptocurrencies. You may also want to check out altcoins (cryptocurrencies other than Bitcoin) to see if any others look like interesting investments to you.

Once you’ve found a place to buy cryptocurrency and you know which ones you want, you can add money to your investment. Whether you decide to make a one-time investment or to do it regularly, remember not to put too much of your money into crypto. It’s fine to have a little money in longshot investments, but most of your portfolio is better off in safer assets.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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The right place to put your money depends on your financial goals. Here are 10 really wise ways to use your cash in 2024. [[{“value”:”

You work hard for your money, so you should make the most of it. That means putting it in the right places.

But where exactly should your hard-earned cash go? The answer depends on your personal situation and the goals you have for it. In any case, making the right choice could save you many thousands of dollars in the long run.

To help you decide on the best place for your cash, check out 10 of the smartest places to put your money in 2024.

1. Debt payoff

The average credit card interest rate is 21.47%, while the typical payday loan has an APR close to 400%. It’s very unlikely you’ll find anywhere else to put your money that would provide the return on investment (ROI) that comes from avoiding such expensive interest.

If you have low interest debt, early payoff doesn’t make sense. You could earn a much better ROI in the stock market than paying off, say, a 3% mortgage.

2. Your 401(k)

If your employer offers a 401(k) match, you should contribute enough to earn it. A 401(k) match is free money. You also get tax breaks for a 401(k) contribution, as you won’t pay taxes on the money you invest in this account.

You can make up to $23,000 in 401(k) contributions in 2024 (plus contribute an additional $7,500 in catch-up contributions if you’re 50 or over). You don’t necessarily need to max out your 401(k) as there are some other good retirement investment plans to consider. But you shouldn’t pass up even a dollar of the matching funds. There’s no excuse to leave free cash on the table.

3. A traditional IRA

A traditional IRA allows you to earn tax deductions for contributions — up to $7,000 worth in 2024 (or $8,000 worth if you’re 50 or over).

IRAs provide more flexibility than a 401(k) because you can open an IRA even if your employer doesn’t offer a retirement plan. You can choose almost any brokerage firm for your IRA and gain access to more investments than a 401(k) offers. Even if you have a workplace plan, it may be worth supplementing it with an IRA.

4. A Roth IRA

If you want to diversify your retirement accounts, you can put money into a Roth IRA in 2024 instead of a traditional one.

A Roth IRA doesn’t come with an upfront tax deduction the year you invest. But withdrawals in retirement are tax free, and the withdrawn funds aren’t counted in determining if your income is high enough that Social Security benefits become taxable.

If you suspect your tax rate may be higher in retirement than right now, putting at least some of your retirement funds in a Roth IRA is a good option. These accounts are subject to the same contribution limit as traditional IRAs: $7,000 (or $8,000 if you’re 50 or over) in 2024. Bear in mind, this is a combined limit across both accounts.

5. A high-yield savings account

Some high-yield savings accounts offer rates above 5.00% as of the start of March 2024. This is way above the national average savings account yield of 0.46%.

Money held in a savings account is accessible any time. Although some accounts have monthly withdrawal limits, they’re easy to work around. Your funds aren’t at risk if your bank is FDIC insured.

If you have funds you’re saving for short- or medium-term goals and will need the money in the next couple years, a high-yield savings account could be the right place for it this year.

6. A health savings account

If you have a qualifying high-deductible health plan, you can put money into a health savings account (HSA). You’re allowed to contribute up to $4,150 for self-only coverage and $8,300 in family coverage for 2024. If you’re 55 or older, you can make an additional $1,000 catch-up contribution.

HSAs are a great place for your money if you’re eligible for one. You can deduct the amount you contribute and withdraw money tax free for qualifying medical expenses. This is the only account offering this feature. Usually, you have to decide to claim your tax breaks now or later.

HSAs allow you to pay for medical expenses with tax-advantaged funds, but you don’t need to use the money right away. You can leave it invested to grow tax free and use the funds in retirement. You can cover health expenses as a senior, or choose to withdraw funds without penalty for any reason after age 65 (although you’d be taxed at your ordinary rate if you aren’t paying medical costs).

7. A certificate of deposit

CDs allow you to lock in your rate for the duration of the CD term. And some certificates of deposit are currently offering rates above 5.00%. This means you could guarantee you keep earning this generous yield even if rates fall.

The downside of CDs is you have to agree to leave your money invested and pay penalties if you don’t. But if you won’t need your money for a few months or a few years, but you don’t want to risk putting it in the market, CDs are the way to go.

8. A money market account

Money market accounts are FDIC insured. They frequently offer better yields than even high-yield savings accounts and more accessibility than CDs. While there are monthly limits with some accounts, your cash is generally accessible via an ATM, check, or even debit cards.

Some money market accounts are also currently offering rates above 5.00% in 2024, so you may want to take advantage of this. These accounts are kind of a hybrid savings/checking account, so they’re ideal for funds you’ll need over the short term.

9. A 529 account

If you have children in your life who may incur educational costs some day, putting money into a 529 account could help them cover those expenses. These accounts come with tax advantages, including tax-free distributions for qualifying educational expenses.

While 529s are commonly known as college savings accounts, up to $10,000 in funds from them can be used for K-12 school tuition costs as well. The rules of these accounts differ by state, so be sure to check out any extra tax benefits they may provide you with where you live.

10. A taxable brokerage account

Finally, taxable brokerage accounts are another good option if you are saving for long-term goals other than retirement or if you want some retirement funds in a more flexible account.

A brokerage account allows you to invest. It’s reasonable to expect around a 10% average annual return, if you pick a pretty safe investment like an S&P 500 index fund that tracks the performance of 500 large U.S. companies.

You can withdraw money whenever you want, but won’t get any tax deductions for contributions. There’s no limit to how much you can put into a taxable brokerage account, though, and you can access any investments your broker offers.

The bottom line

Each of these options makes sense in the right circumstances, so consider which one — or more — are the right places to put your money in 2024, and watch your hard-earned dollars grow.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Savings accounts are widely available and user friendly. Learn 10 facts about them to optimize and grow your savings. [[{“value”:”

Savings accounts are personal finance 101 — you put money into the account, where it’s kept safe for the future and you can access it anytime you need to. But don’t let their simplicity fool you.

These days, you can earn 5% APY or better on your saved cash — but you might still be limited to six withdrawals per month. A savings account can save you money on overdraft fees, but you might be charged for maintenance on the account every month.

As you can see, there’s a lot to know about savings accounts. Keep reading for 10 prescient facts.

1. Savings accounts are safe

A savings account is one of the safest places to keep your cash, assuming your bank or credit union is federally insured (and most are). Banks are covered by the FDIC, while credit unions fall under the purview of the NCUA. In both instances, up to $250,000 worth of cash per account holder in an eligible account is protected. If you have a joint savings account with another person, that protection extends to $500,000. If your bank fails, your saved cash will be returned to you thanks to this insurance.

2. You can beat inflation with a high-yield savings account

As of this writing, the most recent Consumer Price Index Summary showed inflation was up 3.1% year over year from January 2023 to January 2024. Meanwhile, you can open a high-yield savings account with an annual percentage yield (APY) of 5% or higher. This means your saved cash won’t lose value to inflation the way it would in your checking account or a regular savings account (some of which pay as little as 0.01% APY).

3. Some savings accounts have fees

Unfortunately, not all savings accounts are free. In some cases (and especially with brick-and-mortar banks), you’ll need to maintain a certain minimum balance or jump through other hoops (like depositing a certain amount every month) to avoid a maintenance fee. Fees can eat away at your account balance, and with so many banks offering free savings accounts, you have options to avoid them altogether.

4. Automation can make them easier to fund

Some people struggle with remembering to move money from checking to savings. If this is you, automation has your back. You can set up regular automatic transfers from your checking account to your savings account, timed to when you get your paychecks or whenever works best for you. Automating your savings is a way to “pay yourself first,” and moving the money as soon as it arrives in your checking account can help you avoid a situation where it’s the end of the month and you weren’t able to put aside any cash for future goals or emergencies.

5. Your withdrawals might be limited

While you don’t have to leave the money in your savings account alone, you’ll likely deal with rules about how often you can make withdrawals. A common limit is six “convenient transactions” per month (convenient transactions include debit card payments and web transfers), but some banks allow for more. This rule goes back to Regulation D, which was written and implemented by the Federal Reserve to prevent a run on banks like Americans saw during the Great Depression. Make too many transactions from your savings account, and you could face fees or account closure.

6. Interest earned is taxable

You might be earning a lot of cash from your high-yield savings account, but it’s important to know that the interest payments you receive count as taxable income. At tax time, you’ll receive a form 1099-INT from your bank, showing how much money you earned from interest. You’ll be required to report this on your taxes and pay a portion of it to Uncle Sam. It’s worth planning for, especially if you have a high savings balance and earned a lot of income from it.

7. Savings account rates aren’t fixed

Unfortunately, those high rates of 5% and better we’re seeing these days are not forever. Higher rates on savings accounts are due to higher interest rates across the board for financial institutions, thanks to the rate hikes implemented by the Federal Reserve to cool inflation. Rate cuts have been forecasted for 2024, and if we see the Fed lower the federal funds rate, your savings account APY will fall, too. If you want to lock in a higher rate for a period, consider opening a certificate of deposit (CD) with part of your savings.

8. A savings account is a great place for your emergency fund

Having money ready for unplanned and emergency expenses is one of the best things you can do for your finances and peace of mind. A savings account is the most natural place for this money too — consider opening a dedicated emergency savings account and funding it automatically. This way, you’ll have cash available to you and can avoid going into debt on a surprise bill.

9. Savings accounts can be entirely online

Want to avoid fees and earn a higher APY on your savings? Open an account with an online-only bank. They exist entirely on the internet, with no branches to visit — and lower overhead costs as a result. This means they can pass the savings on to you. Getting access to cash can be a bit more complicated with online banks — you may need to link a checking account to your savings to get an ATM card, and then transfer money there to withdraw it. Some online banks have robust fee-free ATM networks, which helps.

10. A savings account can protect you from overdrafts

A savings account can be your first-line defense against overdrafting your checking account. All you need to do is link a funded savings account to your checking, and if you accidentally overspend the balance, money will be transferred from savings to checking to cover it. It’s generally free to set this up, but you may be charged a fee if you use it. This fee will likely be a lot less than the overdraft fee you’d incur without this protection, however.

Savings accounts are about as simple as bank accounts come, but as you can see, there’s more to them than meets the eye. If you don’t already have a savings account, what are you waiting for?

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