Ramses Delgado, Banking Moderator
@ramses_delgado1
In a savings account, the risk of losing your money is extremely low, especially if the account is held at a bank or credit union insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration). However, there are some nuances and indirect risks worth understanding. Here’s the breakdown:
- Inflation: This is the most significant 'risk.' Inflation erodes the purchasing power of your money over time. If the interest rate on your savings account is lower than the inflation rate, your money effectively loses value, even though the balance increases.
- Fees: Some savings accounts may charge fees, such as monthly maintenance fees or excessive withdrawal fees. These can reduce your overall returns, so it’s important to read the fine print of any account you’re considering.
- Interest Rate Fluctuations: Savings account rates are variable and can change. You won’t lose principal, but your earnings could shrink, making it feel like a loss compared to expectations.
Overall, while the risk of losing your actual principal in a savings account is minimal due to government insurance, you should consider the effects of inflation and potential fees on your savings.
You can check the best savings accounts available to ensure that whatever decision you go for really fits your goals.
Did we answer your question?
Important Disclosures
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers. For full transparency, here is a list of our current advertisers.
Advertisers compensate WalletHub when you click on a link, or your application is approved, or your account is opened. Advertising impacts how and where offers appear on this site (including, for example, the order in which they appear and their prevalence). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.
Advertising enables WalletHub to provide you proprietary tools, services, and content at no charge. Advertising does not impact WalletHub's editorial content including our best picks, reviews, ratings and opinions. Those are completely independent and not provided, commissioned, or endorsed by any company, as our editors follow a strict editorial policy.