A linked savings account is a savings account connected to another account, such as a checking or negotiable order of withdrawal (NOW) account. Generally, these linked savings accounts are held at the same financial institution, offering an easier and more efficient way to transfer funds between your different accounts.
Key Takeaways
- Linked savings accounts are connected to another account, like a checking or NOW account.
- These accounts simplify transfers and are sometimes called packaged accounts.
- Balances on both linked accounts typically appear on one consolidated statement, aiding in easier money management.
Simplify Your Finances with Linked Savings Accounts
When you open a linked savings account, your bank connects it by account number to a new or existing checking or NOW account. This setup proves highly convenient for those focused on accumulating savings, as it offers an effortless way to manage and move money.
Linked accounts, often referred to as packaged accounts, report balances on a single consolidated statement. This simplifies record-keeping and can make it easier to achieve your savings goals. Additionally, you can keep the bulk of your funds in the savings account, which usually earns more interest, and transfer money to your checking or NOW account when needed.
Certain banks may tempt you with lower fees or additional perks when you maintain linked accounts. Other types of accounts, like certificates of deposit (CDs), can also be linked, further simplifying your financial management.
Special Considerations for Linked Accounts
While the idea of linking accounts seems solely beneficial, it’s essential to watch out for potential drawbacks. For example, banks offer overdraft protection by automatically transferring money from your savings to checking account when funds are insufficient. However, this service often carries fees.
Frequent transfers can also make your savings account balance fall below the required minimum, incurring additional penalties. Despite these downsides, linking accounts, even between different banks, can offer higher yield options otherwise unavailable at your primary bank. Just remember that external transfers might take longer to process and increment transfer limits per month may apply.
Embrace Efficient Money Management
Banks encourage linked savings accounts because it secures a more significant share of your financial activities. This means better rates for you, especially with higher balances, and simplified money management due to the ease of transferring funds.
Why Consider a Linked Account?
Linked savings accounts typically raise your earnings by keeping more money in a savings account, possibly offering additional features like lower fees or free checking.
Caution When Linking Accounts
While beneficial, linking accounts might also incur extra fees from forced balance maintenance or insufficient funds protection. These charges could result in increased fees for maintaining the account, especially when balances drop below the minimum required.
Related Terms: checking account, NOW account, certificate of deposit, overdraft protection, financial incentives.
References
- Tri Counties Bank. “Linked Savings.”
- Bankrate.com. “Linked savings accounts tied to bank perks.”
