Emergency Funds: Savings Accounts for Rainy Days

When confronted with life's storms, having an umbrella to keep you dry is always comforting. Similarly, in the realm of finances, during life’s unpredictable moments, having a contingency plan ensures safety during challenging times. Keeping a savings account¹ provides a solid foundation for building a rainy day fund. Let’s explore Academy Bank’s savings accounts and how you can make the most of them to weather life’s storms.

What is a Savings Account?

Savings accounts are a straightforward way to put money away for safekeeping. While these accounts earn interest, it’s typically lower compared to other savings methods. Saving accounts¹ are a good fit for those looking to gradually grow their funds without putting down a large investment at the beginning. But effective are they for establishing a rainy day fund?

Are Savings Accounts good for rainy day funds?

Saving accounts are suitable for rainy day funds because they are the least risky savings method. They are a great way to set money aside for the inevitable financial bump in the road. With savings accounts, you can access your funds at any time. This is helpful if you need to use the money in your account several times during an emergency.

Savings Account Pros

• Accessibility: Regular savings accounts are typically easy to open and manage, offering convenient access to your funds whenever needed.
• Safety: Your money in a savings account is generally safe and insured up to a certain limit by the government. (Learn more about FDIC Insurance)
• Flexibility: You can usually deposit and withdraw funds from a regular savings account without restrictions.
• Low Opening and Minimum Balance: Many standard savings accounts have low minimum balance requirements, making them accessible to a wide range of individuals. At Academy Bank, you only need to deposit $25 to get started. There is a required minimum balance of $100, but if you don’t meet that specification, it’s a $5 service fee.

Savings Account Cons                                             

• Low Interest Rates: Regular savings accounts often offer lower interest rates compared to other types of investments or accounts, resulting in slower growth of your money.
• Inflation Risk: If the interest rate is lower than the inflation rate, the purchasing power of your savings may decrease over time.
• Opportunity Cost: While your money is safe in a savings account, it may not generate as much return as if it were invested in higher-yield options, potentially missing out on better growth opportunities.
• Fees: Some savings accounts may have fees attached, such as monthly maintenance fees or potentially fees for excessive withdrawals. It depends on the bank and the savings account.

How can Academy Bank’s Savings Accounts Help Me Save?

At Academy Bank, savings accountholders have the opportunity to enroll in a specialized program designed to increase their savings efforts further. Our Saving Cents² rounds up your change from everyday purchases and deposits the extra money into your savings account. This program comes in handy for increasing your rainy day fund and making sure you have enough money to navigate unexpected emergencies.

Open a Savings Account

Looking for more tools and resources to support your savings goals? In addition to Saving Cents, consider leveraging our diverse range of financial calculators. Specifically, the Emergency Savings Calculator allows you to track your progress and prepare for unexpected financial setbacks. With this tool at your disposal, you can confidently navigate life's uncertainties and rainy days.

Even though there are many great reasons to open a standard savings account, you might choose a different savings method depending on your financial goals. Curious how money markets can help you grow a rainy day fund? Read about this savings method for emergencies in our previous blog.

Member FDIC

¹$25 minimum opening deposit required.  $100 minimum balance required to avoid $5 monthly service charge.  $5 paper statement fee applies.  Closing new accounts within 90 days of opening will result in a $20 closure fee.

² Choose from $1 to $5 increment to round up on your debit card purchases from your checking account. Each night all the extra change will automatically transfer from your checking to your savings.