What is a Linked Savings Account?

A savings account linked to another account, like a checking or negotiable order of withdrawal (NOW), is a linked savings account. The customer’s other accounts are typically held at the same bank as linked savings accounts, facilitating money transfers between accounts.

Linked Savings Account Operation

The bank or financial institution links a customer’s newly opened savings account via account number to a newly opened or already-existing checking or NOW account in the system. These accounts are practical for those wishing to save money because they facilitate transfers.

Packaged accounts are another term for linked accounts. Typically, a single consolidated statement that includes the balances of both linked accounts makes it simpler for customers to manage their finances. Customers can move money into the checking or NOW account as needed, but linked savings accounts also let them maintain the majority of their money in a savings account, where it may generate greater interest. Incentives like free checking or reduced fees may also be available with certain connected or packaged accounts.

Particular Points to Remember

You can link additional account types, including a certificate of deposit (CD), to your other bank accounts. By providing unique perks like a higher interest rate, banks may entice you to link numerous accounts (and keep making deposits into those accounts).

However, there are several situations in which connecting accounts may result in extra costs. For instance, overdraft protection is one advantage of integrating your checking and savings accounts.

Certain banks will automatically move funds from your savings account into your checking account if the balance in your checking account drops too low to keep you from getting hit with overdraft fees. Nevertheless, there is frequently a charge for this service. Additionally, if you initiate that kind of transfer too frequently, your savings account may fall below the minimum, resulting in additional costs.

You could also link accounts from various banks if you discover that the same bank doesn’t offer the best checking and savings accounts for your needs. This might be useful if you want to stash away additional money in a high-yield savings account that you might not be able to access at your regular bank.

Search for the option to connect other accounts. Additional information will be required to complete this, and transfers can take longer. You may need more than the monthly external transfers you can make.

Linked Savings Accounts’ advantages

To enable them to retain a more significant portion of your business for an extended period, banks can choose to offer incentives for linked savings accounts. You might pay higher rates, mainly if you keep your balance higher. Having all your accounts in one place and having transfers available quickly and easily makes money management simpler.

Why would customers want to think about opening a linked account?

With linked savings accounts, users can allocate money into checking or NOW accounts as needed while keeping most of their funds in a savings account, which could provide higher returns. Incentives like free checking or reduced fees may also be available with certain connected or packaged accounts.

What should you watch out for while creating a linked savings account?

Adding accounts together could result in extra costs. Banks frequently move money automatically between accounts to keep a specific balance or if you don’t have enough money to pay. These transactions frequently come with a fee for each occurrence. If this behavior results in your savings account falling below the minimum level, further penalties may apply, making it more problematic. Linking may require additional steps if you switch banks or close an account.

Conclusion

• Linked savings accounts are linked to another account, such as a checking or negotiable order of withdrawal account, making money transfers easier.
• Linked accounts are sometimes known as bundled accounts.
• In most cases, the balances of both linked accounts are reported on a single consolidated statement.