savings

7 tips to choose a health savings account

3. Fees

Some HSAs have a monthly fee. Others have per-transaction charges. And still others have combinations of fees. Some charge a fee to open an account, obtain, replace or renew a debit card, transfer money from a savings account to an investment account and back again, and so on. Always ask for a complete schedule of fees and find out what is -- and isn't -- included in a bundled fee.

Health savings accounts may also have so-called "behavioral fees," which are triggered by circumstances such as an overdraft or an insufficient funds deposit. These fees are typical of other types of bank accounts as well.

4. Security

Consumers should look for an HSA custodian that's serious about security. Ryan suggests two clues: whether the institution's website is secure and whether Social Security numbers are truncated on printed documents.

5. Records

Health savings account administrators are required to provide paper or electronic account statements. HSA Bank, among others, also offers electronic check images though its website.

"We found that by offering Internet banking on the website," Hoewisch says, "people can see their items at any time."

6. Investment

Some HSAs are only savings accounts while others feature an investment option. Those who want to invest should consider the range and type of investments, fees and flexibility.

Wells Fargo, for instance, offers six or seven of its own mutual funds and allows customers to transfer money between savings and investments without charge.

HSA Bank gives customers access to 11,000 mutual funds and the ability to buy stocks through an agreement with TD AmeriTrade. The account is free. AmeriTrade charges $9.95 per trade.

"If you aren't trading, it's not costing you anything extra," Hoewisch says.

Not that many people take advantage of the health savings account investment feature -- if Wells Fargo's experience holds true across the industry. Ryan says 87 percent of the HSA funds that Wells Fargo administers are in cash or money market funds.

"Very little of (the total) is invested in a mutual fund, and that's because the balances are very small," she says.

Savings accounts are insured, up to certain limits, by the Federal Deposit Insurance Corp., which protects savers from loss if a bank goes out of business. Investment accounts don't have this protection.

7. Minimum balances

Health savings accounts typically don't require a minimum balance, but some administrators will waive certain fees if the account has at least, say, $3,000 or $5,000. Be sure to ask whether the waiver is based on a minimum savings balance or a combination of a savings and investment balance.

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