Saving 101: What To Look For in a Savings Account

Having your own money is one of the most incredible things in the world. You get to buy your needs and wants out of your own pocket, treat your friends and family, and enjoy financial independence. But it can also become overwhelming if you keep having expenses without putting some aside. That’s why knowing how to choose a savings account is essential.

A savings account is more than just an upgraded piggy bank; it's an effective tool for achieving financial growth and ensuring security. If it’s your first time opening a savings account or you want to switch to a different one, this guide is for you.

Learn what to know before opening a savings account and see how this can help you reach financial freedom.

What is a Savings Account?

Before we delve deeper into choosing a savings account, let’s start with the basics. A savings account is a simple form of investment where you can deposit money and earn some interest. It follows a simple concept: you deposit cash into an account, and as your money grows, you accumulate interest.

Savings accounts are designed to hold onto savings you do not need to access regularly. With most savings accounts, you can only access your funds through a money transfer, an ATM, or in-person withdrawal.

Moreover, opening a savings account benefits people by dividing their money for different purposes. They can use it for emergency funds, retirement, education, and short-term savings like vacations, travel, or home repairs. And because of its safety, accessibility, and interest-earning potential, a savings account is also a great place to store more future funds. Commercial banks, credit unions, and digital financial institutions offer various savings accounts.

What to Look For When Opening a Savings Account

Now that you know what a savings account is, let’s dig deeper. When people look for a bank to open their savings account, they often side with those referred to them, seen in advertisements, and those considered popular. While these are valid, you must also know the essential features of a savings account to help you further decide which bank to choose.

Here are the important factors to consider:

1.    Interest Rate and Annual Percentage Yield (APY)

In a savings account, interest rates represent the compensation that a bank offers a customer for keeping their funds in the bank. For major banks in the Philippines, the typical interest rate a person can earn is between 0.10% and 0.25%. There are other banks out there with better interest rates, but they are almost entirely online or available exclusively through mobile apps.

The APY, on the other hand, is the percentage that represents the amount of money you earn in interest on your savings account balance every year. Because it more accurately reflects the interest earned after factoring in compound interest, financial institutions often promote the APY instead of the simple interest rate. With compound interest, your account balance will gradually increase as interest is added.

When choosing a savings account, opt for a bank with competitive interest rates so the APY grows exponentially.

2.    Initial Deposit Amount

Another feature of a savings account you must consider is the required initial deposit amount. Most banks typically require a minimum deposit amount before individuals can successfully open a savings account. The amount varies based on the savings account prospective customers wish to open. Depending on the bank, it can range from P100 to P10,000 or more.

Some banks don’t require initial deposits. This is a huge benefit for those opening savings accounts for the first time. It lets them set up an account without depositing any money at first. Additionally, it makes saving at a bank more inclusive, further promoting financial growth and independence.

If you're opening a savings account for the first time or switching institutions, look for one that requires no or a minimal opening deposit. And if you’re fine with their initial deposit amount, remember to bring it to the bank for a successful account opening.

3.    Maintaining Balance Requirements

Besides the initial deposit, bank account openers must also know if the bank they prefer requires a maintaining balance. Frequently, a minimum daily balance must be maintained in a savings account to keep the account running. Some banks usually require an average daily balance of at least P100, while others have stricter requirements for the minimum and maximum monthly account balances. Dropping below the bank-specific threshold could result in charges.

Fortunately, some banks don’t require you to maintain a minimum balance in your account. This is, once again, a huge benefit for first-time applicants and those looking to switch financial institutions.

Most customers prefer banks that don’t require a maintaining balance or, at the very least, savings accounts that don’t penalize you for falling below a minimum. So, when selecting an ideal savings account, choose the one most appropriate for your situation to avoid penalties.

4.    Monthly Fees and Other Service Charges

While savings accounts typically have lower fees than checking accounts, many still charge monthly fees. However, monthly payments shouldn’t immediately put you off. What matters is knowing how you can avoid the fee by fulfilling the necessary conditions.

In most cases, you can avoid paying a regular fee by doing the following:

• Maintaining the required account balance: One of the most straightforward approaches to avoiding a monthly fee is to keep a certain minimum balance. Look for a savings account with a low minimum balance you can maintain without breaking the bank.
• Organizing routine payments: Avoid penalties and other bank charges by setting up automatic payments. When you use your savings account to pay bills, automatic transfers ensure you pay your bills on time. You can do this through your bank's mobile app or by contacting customer service for assistance.
• Syncing with a checking account at the same bank: Linking your checking account to your savings account at the same bank can help you avoid the monthly fee. However, opening a checking account just to waive this fee may not be the best option, as checking accounts usually have their own fees.

Apart from monthly fees, there are other bank charges you must look out for before opening a savings account. One of them is paying for the debit card fee. Some banks charge payment for issuing and delivering debit cards. If you don’t want this fee, find a bank that doesn’t charge for debit cards.

5.    Account Opening Requirements

When learning how to choose a savings account, one should be familiar with the requirements for opening one. Each bank requires almost the same requirements, including:

• Valid IDs
• Proof of address
• Initial deposit, depending on the preferred bank
• Completed application form

These are the common requirements when opening a savings account in the Philippines. Some banks require more documents for further verification processes.

If you’re deciding which bank to choose, opt for a financial institution that has minimal requirements. This means they are more inclusive, particularly for first-time account holders who only have one or two valid forms of identification.

6.    Accessibility and Usability

Easy access and its usability are other crucial aspects of a good savings account. Try to find a financial institution that has a branch near your home. This will help whenever you need to go to the bank and address banking issues.

You should also check if the bank you’re considering has digital banking features. Having an online account highlights convenience. It’s a hassle-free method to handle financial matters, wherever you are.

Here are other things to consider when looking for a savings account's accessibility and ease of use:

• Smooth money transfer, deposit, and withdrawal processes
• Trouble-free ATM access (some banks allow cardless transactions)
• Secure online and mobile banking features
• Fast online account application

If your preferred bank meets these criteria, it will undoubtedly make your first banking experience a breeze.

7.    Supplemental Savings Accounts

Besides your primary or emergency savings account, it can be helpful to have another savings account to save for big life events like buying a car, house, vacation, or wedding. This method helps you allocate and manage your finances to achieve these goals. These accounts can have a label for what you’re saving up for and can be open to a lumpsum or multiple, ongoing transfers.

There are banks that let you open multiple savings accounts under one financial institution. Try looking for this feature when choosing a savings account. Not only will it help you accomplish your goals, but it will also streamline managing your finances in one convenient location.

8.    Savings Account Perks

Many banks provide bonuses for using their debit cards, such as cashback or insurance. Certain banks may impose yearly charges for the use of debit cards, while others may exempt cardholders from this fee if their annual transactions reach a specific threshold. Financial institutions also provide premium savings accounts with supplementary features for an added fee.

If you’re into these savings account perks, try looking for them in your search for an ideal financial institution partner.

What Savings Account is Right for Me?

With everything you’ve learned about what to know before opening a savings account, have you decided which bank partner to take on?

Having a savings account is a crucial step towards financial stability. That’s why, here at RCBC, we are dedicated to helping people find their way to financial freedom.

We offer comprehensive savings accounts for every Filipino. Whether you’re a kid, a teen, or an adult looking to save and grow your money, we’ve got you! RCBC offers easy and flexible savings accounts for your different goals and needs.

Discover which savings account best suits you:

• OneAccount - combines the benefits of a savings account, a checking account, and a time deposit into a convenient package.
• iSave - virtual savings account with free personal accident insurance and hospitalization benefit
• Basic Savings - cost-effective deposit account that comes with an ATM card
• GoSavers - savings account for children and teenagers that includes free comprehensive insurance for both parents and children, as well as an ATM card and a passbook
• SSS Pensioner - ideal for pensioners and includes an ATM card and passbook
• Regular Savings ATM - regular savings account with an ATM card
• Regular Savings Passbook - regular savings account with an ATM card and passbook
• eWoman Savings - savings account for women that comes with free life insurance
• Dragon Peso Savings - savings account with tiered interest rates and unlimited withdrawals
• Foreign Currency - foreign currency savings account that comes with a passbook
• Dragon Dollar Current - dollar savings account with no lock-out period that comes with unlimited withdrawals and a passbook

Each type of savings account offers competitive interest rates that will let you grow your money in the long run. Some also don’t require average daily balances, making them perfect for kids and teens learning how to save and maintain their money in banks.

What’s more, when you keep a certain amount of balance in your account, you’ll earn interest. The more you save, the more interest you will accrue in your balance, so don’t let that money sit in your piggy bank unused!

Opening a savings account at RCBC is also simple. A government-issued photo ID, proof of current residence, and a filled application form are all you need. And if you can’t go to the nearest RCBC branch, no problem! You can open an account online.

RCBC Digital, the bank's online banking service, allows customers to conveniently open a savings account wherever they are. You just need at least one valid ID to start the process. As a bonus to opening an account online, no maintaining balance is required, and your account will be ready after one banking day of verification—a truly hassle-free banking experience.

Get Started on the Road to Financial Security with RCBC

Understanding what to look for when opening a savings account is a step in ensuring financial growth. It’s not an easy decision, but a fulfilling one once you’ve made the right choice.

To help you decide, keep in mind the following factors when choosing a savings account:

• Interest rate and APY
• Initial deposit amount
• Maintaining balance requirements
• Monthly fees and other service charges
• Account opening requirements
• Accessibility and usability
• Supplemental savings accounts
• Savings account perks

With all of these options, reviewing which account is best for you can make a significant difference in your financial journey. Take time to understand them, weigh the pros and cons, and then decide what savings account is right for you.

Need more time and information on how to choose a savings account? Get in touch with us right away, and we’ll be glad to help.