3 Reasons to Move Money Out of Your Savings Account Right Now

It may be time for a transfer.

You'll often hear that the more you can boost your savings account balance, the better. That's because a higher balance will put you in a great position to cope with financial emergencies, whether it's home repairs, medical bills, or job loss.

But you may reach a point where you actually do have too much money sitting in your savings account. Here are a few reasons to take some cash out of that account and put it elsewhere.

1. You want to snag some tax breaks

The upside of keeping your money in a savings account is getting to earn interest on it, while still having easy access to that cash. But you don't get a tax break on the money that goes into your savings account. Quite the contrary -- the interest you earn in your savings account is subject to taxes.

If you're looking to reduce your tax burden, you may want to move some of your cash into an IRA. Traditional IRA contributions are exempt from taxes, so if you put $3,000 into an IRA this year, the IRS won't tax you on that $3,000.

Now one thing you should know is that IRAs are somewhat restrictive in that you can't access your money before age 59 1/2. Doing so commonly results in a 10% early withdrawal penalty (though there are some limited exceptions). But if you have money you don't need for emergencies and you're willing to earmark it for retirement, then it pays to make that transfer.

2. You want a higher return

Savings accounts are finally starting to pay more generously following years of minimal interest. But even so, you might still snag a much higher rate of return on your money by investing some of it in a brokerage account.

Now, the downside here is that, with investments in a brokerage account, you do run the risk of losing money if market conditions change for the worse or the companies you put money into don't perform well. But if you're eager to grow your money at a faster rate, then it could pay to transfer some out of savings and into your brokerage account.

3. You're expecting a large bill

If you know you'll soon need to write out a large check for a car or home repair, or for childcare tuition, then it pays to move the money you need into your checking account. If you have your savings account and checking account at the same bank, you may be able to transfer between the two instantly. But if you have those accounts at separate banks and you know you have a large bill coming up, then it pays to make that transfer into your checking account so you don't have to stress about those funds clearing in time.

It's a great idea to keep your savings account well-stocked. But if these situations apply to you, it could pay to move some cash out of savings and put it in a more appropriate place.