2a:["$","$L2b",null,{"category":"$2c","relatedArticles":[{"id":"cG9zdDoxNzQyNDA=","databaseId":174240,"postId":174240,"author":{"node":{"id":"dXNlcjo5Mw==","databaseId":93,"userId":93,"avatar":{"url":"https://secure.gravatar.com/avatar/04483497dbd73f712b504e401c9c7d22?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Mark Henricks has reported on personal finance, investing, retirement, \r\nentrepreneurship and other topics for more than 30 years. His freelance \r\nbyline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"William","fullName":"Mark Henricks","lastName":"Henricks","name":"Mark Henricks","postCount":{"pageInfo":{"offsetPagination":{"total":770,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mhenricks","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTUxOA==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19518,"categoryId":19518,"link":"https://smartasset.com/savings-accounts/articles","name":"Savings Accounts","postCount":{"pageInfo":{"offsetPagination":{"total":54,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"savings-accounts","ancestors":{"nodes":[{"name":"Checking Account","slug":"checking-account","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Checking Account","id":"dGVybTo0NzIx","slug":"checking-account","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$2d","date":"2022-10-20T16:28:17","excerpt":"

\n","featuredImage":{"id":"cG9zdDoxNzQyNDE=","databaseId":174241,"altText":"SmartAsset: Does Closing a Savings Account Affect Credit?","date":"2022-11-08T18:48:04","fileSize":27545,"mimeType":"image/jpeg","modified":"2022-11-08T18:48:04","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2022/10/using-her-smartphone-picture-id1350325088.jpg","__typename":"MediaItem"},"modified":{"datetime":"2022-11-8","readable":"November 8, 2022"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/checking-account/closing-savings-account-credit-score","metaDesc":"Closing a savings account can have a negative effect on your credit score if the account has a negative balance when closed.","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":5,"title":"Can Closing a Savings Account Affect Your Credit Score? - SmartAsset","__typename":"PostTypeSEO"},"slug":"closing-savings-account-credit-score","status":"publish","title":"Can Closing a Savings Account Affect Your Credit Score?","uri":"/checking-account/closing-savings-account-credit-score","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo5Mw==","databaseId":93,"userId":93,"avatar":"$2e","description":"Mark Henricks has reported on personal finance, investing, retirement, \r\nentrepreneurship and other topics for more than 30 years. His freelance \r\nbyline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.","additionalMeta":"$2f","email":null,"firstName":"William","fullName":"Mark Henricks","lastName":"Henricks","name":"Mark Henricks","postCount":"$30","slug":"mark-henricks","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybToxOTUxOA==","children":"$33","databaseId":19518,"categoryId":19518,"link":"https://smartasset.com/savings-accounts/articles","name":"Savings Accounts","postCount":54,"slug":"savings-accounts","ancestors":"$35","parent":"$38","__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Closing a savings account can have a negative effect on your credit if the account has a negative balance when closed. Credit bureaus don’t consider savings and checking activity, including account closings, when compiling credit scores. But if you don’t pay off a negative balance on a closed account, the bank eventually may turn it over to a collection agency. This likely will be reported to a credit bureau, which may result in a large and lasting downgrade of your credit score. You can avoid problems by closing savings accounts correctly and making sure there are no outstanding balances. Talk to a financial advisor before making major moves that could affect your personal finances.

","

Savings Account Closing Basics

","

Having a savings account is a keystone to good personal financial health. However, sometimes you may want to close a savings account. For instance, you may find another savings account that has lower fees or pays more interest. If you have multiple savings accounts, closing all but one may make it easier to keep track of your finances.

","

Maintaining a good credit score is also important for solid financial standing. Your credit score can determine whether or not you can get a loan to purchase an automobile or home, as well as the cost of the loan. Credit scores also are considered when you are applying for a job, an insurance policy and even a residential lease. Most of the time, closing a savings account won’t affect your credit score at all. Banks don’t report account activity to the credit bureaus. However, banks do report accounts that are closed with an outstanding balance to ChexSystems.

","

What Is ChexSystems?

","

ChexSystems is a service that keeps files on individual consumer bank activity such as opening and closing accounts, credit inquiries, bounced checks and unpaid fees. Banks, credit unions and credit card issuers turn to ChexSystems for information about applicants for new accounts. Negative entries in your ChexSystems file, such as a history of abusing overdraft protection or opening and closing too many accounts too quickly, may make it hard to open a new account.

","

ChexSystems also reports some account-related activities to credit bureaus. Specifically, if you close an account with an outstanding balance, this information may wind up in your credit file, courtesy of ChexSystems. Even then, your credit score likely won’t feel it, at least not yet. The real impact occurs if you don’t pay the outstanding balance.

","

Causes and Consequences of Negative Balances

","

","

There are a number of ways a savings account can wind up with a negative balance. You may incur a fee for using an ATM, for not maintaining a sufficient balance or for a wire transfer. Usually, these fees will be paid out of the funds in the account. But if you close the account before the fees are paid, you could wind up with a closed account that has an outstanding negative balance.

","

This is still not a problem for your credit score unless you don’t pay the bank its money and it turns the account over to a collection agency. When the collection agency reports it to a credit bureau, as is likely, this will go down as a negative on your payment history, which is the major factor affecting your credit score. And a collections account stays on your report, dragging down your score, for seven years.

","

Safely Closing Savings Accounts

","

You can avoid this situation by closing your accounts smartly. Before closing a savings account, first, open a new one or at least make sure you have one open. Cancel automatic transfers to or from the account. Wait for any recent transfers to clear. Check with the bank to make sure you don’t have a negative balance. Consider leaving some funds in the account for a few weeks to cover any late-arriving fees. After closing the account, check back later to ensure that you have left it in good standing.

","

The Bottom Line

","

You could do your credit score some damage if you close a savings account that has an outstanding negative balance and then don’t make good on the debt with the bank. Unpaid negative balances may be turned over to collections agencies, which will likely report this to credit bureaus. Any time an account goes to collections it will show up as a hit on your payment history, which is the most important factor considered when calculating credit scores.

","

Tips for Saving

","$3a","

Photo credit: ©iStock.com/milan2099, ©iStock.com/fotostorm, ©iStock.com/tolgart

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\n","featuredImage":{"id":"cG9zdDoxOTA2Njk=","databaseId":190669,"altText":"Are CDs FDIC-Insured","date":"2023-03-16T02:00:32","fileSize":21303,"mimeType":"image/jpeg","modified":"2023-03-16T02:00:32","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2023/03/cds-fdic-insured.jpg","__typename":"MediaItem"},"modified":{"datetime":"2023-3-16","readable":"March 16, 2023"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/checking-account/are-certificates-of-deposit-cd-fdic-insured","metaDesc":"Certificates of deposit are great savings vehicles, usually offering higher interest rates than savings accounts. But is your money insured by the FDIC?","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":4,"title":"Are Certificates of Deposit (CDs) FDIC-Insured? - SmartAsset","__typename":"PostTypeSEO"},"slug":"are-certificates-of-deposit-cd-fdic-insured","status":"publish","title":"Are Certificates of Deposit (CDs) FDIC-Insured?","uri":"/checking-account/are-certificates-of-deposit-cd-fdic-insured","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo2Mg==","databaseId":62,"userId":62,"avatar":"$3c","description":"Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.","additionalMeta":"$3d","email":null,"firstName":"Lauren","fullName":"Lauren Perez, CEPF®","lastName":"Perez, CEPF®","name":"Lauren Perez, CEPF®","postCount":"$3e","slug":"lauren-perez-cepf","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybToxOTUyMA==","children":"$41","databaseId":19520,"categoryId":19520,"link":"https://smartasset.com/certificate-of-deposits/articles","name":"Certificate of Deposits","postCount":22,"slug":"certificate-of-deposits","ancestors":"$43","parent":"$46","__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Certificates of deposit (CDs) offer a great, more structured way to save. CDs have specific time terms that typically vary from a few months to a decade. After you make your initial deposit, you can’t access your funds until the term ends. In exchange for this lack of access to your funds, you get a higher interest rate, and CD rates tend to outpace those on savings accounts. Some savers might wonder, though, if the differing nature of these deposit accounts makes CDs less safe than savings accounts. Consider working with a financial advisor as you work to build your savings.

","

Are CDs FDIC-Insured?

","

The good news is that money in a certificate of deposit is just as safe as it is in a savings account. CDs, like all deposit accounts, have FDIC insurance up to the $250,000 legal limit.

","

Established by the Banking Act of 1933, the FDIC protects your money in the event of bank failure. So if your bank starts to go under, you don’t need to rush to the nearest branch to withdraw all your money. Instead, the FDIC will get that money back to you within a couple of business days.

","

FDIC insurance applies to the first $250,000 you have in your deposit accounts at a given bank. The FDIC won’t insure money beyond this limit in your total accounts with one bank. So if you have a savings account and two CDs at a given bank, with $300,000 across the three accounts, then in the event of a bank failure you would only be guaranteed to get back $250,000 of that $300,000.

","

How FDIC Insurance Works

","

","

The FDIC returns your money to you in one of two ways. One option is the FDIC will open another deposit account for you at a different financial institution. They’ll fund this new account with the exact, insured amount left behind at the closed bank (again, up to $250,000). Alternatively, the FDIC will issue a check to you for the amount that was in the closed account with the failed bank.

","

Since it might take a couple days – longer if you have high balances to recover – you may want to keep some emergency funds elsewhere. Your best bet is to keep another account at a different institution. That way, you can cover your expenses in the interim.

","

Also note that FDIC insurance does not cover any money lost due to identity theft or fraud. In those cases, you’ll need to contact your bank, credit bureaus and the authorities. Banks often have systems in place to protect you from any liability for unauthorized transactions.

","

CDs at a credit union have National Credit Union Administration (NCUA) insurance instead of the FDIC. The NCUA uses its National Credit Union Share Insurance Fund to insure your credit union deposits up to $250,000 as well.

","

Are Brokered CDs FDIC-Insured?

","

It’s important to note that brokered CDs are a different kind of CD and aren’t always FDIC insured. Brokered CDs are certificates of deposits that you purchase through a brokerage account. While this allows you access to a wider range of CDs in one account, the risk is that they don’t always have an FDIC guarantee. This would be the case when the brokered CD acts more as an investment account, and the CD is not in your name.

","

Still, it’s possible to open a brokered CD and guarantee insurance protection. Check out FDIC-insured Fidelity CDs for one such example.

","

Bottom Line

","

","

If you need some more structure in your savings accounts, definitely consider opening a CD. You can even open multiple CDs at the same time, with staggered maturity dates, to build yourself a CD ladder. This will allow you to take advantage of savings and payouts every few months or years, depending on how you set it up. Just keep an eye on your deposits as they grow to avoid ever having uninsured money.

","

Tips for Saving Responsibly

","$48","

Photo credit: ©iStock.com/Photobuay, ©iStock.com/BrianAJackson, ©iStock.com/FatCamera

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A certificate of deposit (CD) account is a popular savings tool offered by banks and credit unions that require you to lock your money away for a set period of time in exchange for a fixed interest rate. It’s important to understand how a CD account works, the different types of CDs available and the […]

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","

What Is a CD Account and How Does It Work?

","

A CD, or certificate of deposit, is a type of savings account where you deposit a fixed amount of money for a set term, ranging from a few months to several years. In exchange for leaving your money untouched during that period, the bank or credit union offers a higher interest rate when compared with a standard savings account.

","

CD accounts are considered low-risk because they offer guaranteed returns and are insured by the FDIC (up to $250,000 per depositor per bank) or the NCUA for credit unions.

","

Once the term ends, or matures, you can withdraw your initial deposit along with the interest earned. However, withdrawing the money before the CD matures typically results in a penalty, which can reduce your interest earnings.

","

You should also note that CD rates fluctuate. Knowing this is important because rate changes can affect your potential earnings. Therefore, to mitigate risk, investors often buy fixed-rate CDs, as they guarantee the same interest rate for the entire term, regardless of market changes.

","

You could, however, make more money with variable-rate CDs if interest rates rise, as these CDs may offer higher returns that adjust with market conditions. But this also means taking on more risk, and potentially losing money when the market drops.

","

Common Types of CDs

","

Common types of CDs include traditional CDs, jumbo CDs, no-penalty CDs and bump-up CDs. Here’s a closer look at each:

","$56","

Benefits of CDs

","

","

If you’re considering CD investments, here are five benefits to keep in mind:

","

Higher interest rates: CDs are an attractive option for individuals looking to earn more on their savings without taking on significant risk.
Guaranteed returns: Since CDs offer a fixed interest rate, you know exactly how much you’ll earn over the term.
FDIC and NCUA insurance: CDs are insured up to $250,000 per depositor, making them a very safe option. This guarantees that even if the bank or credit union fails, your money is protected.
Predictable savings: CDs provide a clear timeline for when you can access your funds, making them ideal for individuals with specific savings goals, such as buying a house or funding a large purchase.
Encourages discipline: By locking your money in a CD for a fixed term, you reduce the temptation to dip into your savings for impulsive purchases, helping you stay on track with long-term financial goals.

","

How to Open a CD

","

To open a CD account, start by researching different banks and credit unions to find the best rates and terms, and check that the institution is insured by the FDIC or NCUA.

","

Decide on the type of CD and the term that align with your financial goals, considering factors like interest rates, penalties and your ability to leave the money untouched for the duration.

","

If you can’t access the funds without a penalty, make sure you’re comfortable with the terms before committing.

","

Once you’ve chosen your CD, deposit the required initial amount using a bank transfer, check, or cash.

","

After funding the CD, your money will begin earning interest. Then, when the CD matures, you can either withdraw your funds or roll the balance into a new CD, as many banks offer automatic renewal options.

","

Bottom Line

","

","

A CD account can offer a secure and predictable way to grow your savings, with higher interest rates than traditional savings accounts. But you should also keep in mind that you could face penalties for early withdrawals. Additionally, since interest rates fluctuate, you could also miss out on higher interest rates if market rates rise during the CD term.

","

Financial Planning Tips

","$57","

Photo credit: ©iStock.com/andresr, ©iStock.com/VioletaStoimenova, ©iStock.com/Jacob Wackerhausen

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Health savings accounts (HSAs) are a tax-advantaged way to save for medical expenses. Employer contributions to a health savings account are often part of this benefits package, which helps employees cover healthcare costs. If a health savings account has employer contributions, those funds are not counted as taxable income, providing a significant boost to employee […]

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If you’re considering an HSA, a financial advisor can help you select investment options within the account and strategize withdrawals to minimize taxes and penalties.

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What Is an HSA?

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An HSA is a type of savings account that allows individuals with high-deductible health plans (HDHPs) to set aside money for qualified medical expenses.

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Unlike a flexible spending account (FSA), funds in an HSA roll over year after year, providing a long-term savings vehicle for healthcare costs.

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HSAs are funded with pre-tax dollars, meaning contributions reduce your current taxable income. Both individuals and employers can contribute to an HSA, up to the HSA maximum contribution limit set annually by the IRS. The funds can be used for a wide range of healthcare expenses, including doctor visits, prescription medications and even some over-the-counter items.

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One of the primary benefits of an HSA is its triple tax advantage:

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Contributions are tax-deductible
HSA balances grow tax-deferred
Withdrawals for qualified medical expenses are tax-free

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You should also note that after age 65, you can withdraw funds from your HSA for non-medical expenses without incurring the 20% penalty. However, you will still need to pay income tax on those withdrawals. For medical expenses, however, the withdrawals remain tax-free and penalty-free.

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And finally, any unused funds can be invested, potentially growing your savings even further over time.

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How Employers Can Contribute to HSAs

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Health savings account employer contributions can happen in several ways. One common method is a direct contribution, where the employer deposits a set amount into the employee’s HSA, either as a lump sum or in installments.

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Another method involves matching the employee’s own HSA contributions, similar to how employers might match contributions to a 401(k) plan.

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Employers can also offer HSA contributions as part of a wellness program, rewarding employees for completing health-related activities, such as annual check-ups or participating in fitness programs.

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How Often Can Employers Contribute to an HSA?

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Employers can make contributions to an HSA as often as they like, whether on a regular basis, such as with each paycheck, or through one-time contributions. The timing and frequency of contributions are typically outlined in the employer’s benefits plan.

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However, both employer and employee contributions are subject to annual limits set by the IRS. These limits are periodically adjusted for inflation and depend on whether the account holder has individual or family coverage under a high-deductible health plan. Regular contributions can help employees steadily build their HSA balances, providing a ready source of funds for healthcare expenses throughout the year.

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HSA Contribution Limits

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The IRS sets contribution limits for HSAs, adjusted each year for inflation. For 2024, the contribution limit is $4,150 for individuals with self-only coverage under an HDHP and $8,300 for those with family coverage. Additionally, individuals aged 55 or older can contribute an extra $1,000 as a catch-up contribution, bringing their total potential contribution to $5,150 or $9,300, respectively.

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Is There a Limit on Employer Contributions?

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There is no specific limit on how much an employer can contribute to an employee’s HSA. However, HSA employer contributions count toward the overall annual limit.

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For example, if an employer contributes $2,000 to an employee’s HSA and the employee has self-only coverage, the employee can contribute up to $2,150 to reach the 2024 limit of $4,150. It’s essential for both employers and employees to monitor contributions throughout the year to ensure they do not exceed the IRS limits, as excess contributions could be subject to penalties and taxes.

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Bottom Line

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HSAs offer tax advantages and flexibility for managing healthcare expenses. Employer contributions add pre-tax funds that do not count as taxable income. Knowing the annual limits and tax benefits can help you use your HSA effectively.

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Tips to Manage HSA Investments

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