Opening a savings account isn't as straightforward as it used to be. Today, you have more account options to choose from and you don't always need to visit your local bank to open the account. As a result, it's become even more important to read the fine print of the agreements or contracts you sign with financial institutions. With the recent popularity of online banking, you need to be especially careful to avoid becoming the victim of fraud.
You Must Sign a Contract
All financial institutions will require agreement to their contract terms before opening a savings account. These terms outline the types of accounts you can open, the state's laws that may apply to the account, how long it takes for deposits to clear, the amount of fees you'll be charged, the rate of interest that will accrue on your balance, and, for certificates of deposit, the amount of each early withdrawal penalty.
Some Savings Accounts Aren't Fully Insured
Whether you have a traditional savings account, a money market account (which requires a higher amount), or a certificate of deposit account (which requires a set amount of time before withdrawal), the Federal Deposit Insurance Corporation (FDIC) usually insures your deposits up to $250,000. However, the FDIC doesn't insure some of the accounts you have with brokerage and investment firms that invest in mutual funds, bonds, and stocks.
Opportunities for Fraud
Savings accounts can be opened with a financial institution that doesn't have offices or branches, but requires all transactions to be done electronically. This means deposits are usually made through one of the electronic transfer options, all of which will require you to provide account information online. Take care to transfer your account information securely to avoid being the victim of identity theft or unauthorized access to your accounts. Always use your home computer rather than a public one.
High Interest Rate Offers May Not Be Legitimate
There is nothing wrong with shopping around for the best savings account interest rate. However, if you find a financial institution that's offering a much higher rate than most other financial institutions, it may be too good to be true. Research the financial institution's reputation. Carefully examine any "fine print." If you do fall victim to a fraudster, however, the law is on your side.
A Consumer Law Attorney Can Help
The law surrounding savings accounts and consumer rights is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a consumer law attorney.