A savings account is a product offered by most banks where you can safely store (or save) money and in return the bank will pay you interest. A savings account is without a doubt the safest way to save up money for either a large purchase or an emergency fund.
Before opening a savings account, you need to decide which type of account is best for you.
The Various Types Are:
Regular Savings Account
This is the most basic kind of savings account and is great for those who just want to put some money aside every month. Another name for this type of account is “Passbook Savings” and it gives incredible opportunity to the account holders. The advantages of this account are:
1. Easy access
2. Low or no minimum balance
3. No limits on withdrawals and charges
This kind of account is appropriate for those who aren’t planning on taking money out of their savings for a while and want to gain more interest. The benefits are:
1. Higher rates of interest
2. Easy to access
3. No withdrawal charges
Online Savings Account
These are similar to basic accounts but typically provide higher interest on deposits. This is due to the fact that they don’t have nearly as many overhead fee’s as physical banks do. The benefits are:
1. You can perform all of your bank related tasks sitting on your couch.
2. You can verify your account balance, purchases, and history online.
3. Much better interest rates.
High APY Saving Accounts
If you want to invest your money in a high yield/risk free way, then consider high interest saving accounts. Of course it’s important to remember that not all high yield saving accounts are created equal, so doing proper research before opening one is important.
So what do you need to look for when opening a high APY savings account? The first thing is to examine the present market rates of various banks and credit unions. In other words, figure out which ones will provide you with the highest APY. Next, you want to make sure there is a lot of flexibility within the account. The account should provide you the luxury of depositing or withdrawing money whenever you want.
Unlike the majority of other investment products, high interest saving accounts don’t have any lock-down term. This means that your money should always be liquid and accessible.
The Importance of Having a Savings Account
Regardless of what type of account you choose to open, it’s very important you take the time to actually open some sort of savings account. Many consumers have a checking account and usually have a debit card, but there are still many people who do not have a savings account set up.
For one reason or another, the majority of consumers who open a checking account usually do not open a savings account at the same time, but this is a big mistake. Listed below are some reasons why you should open a savings account today, as well as the importance of managing your money in the account.
What are the Advantages of Opening a Savings Account?
A savings account comes with many benefits and will help you achieve some of your goals and objectives. You have to find out what you want to accomplish, then understand how a saving account can help you get there.
Here are a few of the most obvious advantages of a savings account
1. Good foundation of wealth for the future
2. Provides you with funds in case of an emergency
3. Earns solid interest if you don’t touch it
What Are the Benefits of Saving Money in a Bank?
There are many benefits to using a bank or credit union for a savings account instead of just saving the money yourself and keeping it in a safe.
Here are four of those benefits:
1. Earn Interest
Money in a savings account earns interest. So just keeping your money in a savings account means you’re making money.
If you put money into a savings account you don’t have to worry about your money being lost or stolen. Be sure to select a bank or credit union that is insured by the FDIC. This means that if the bank or credit union goes out of business, you still get your money.
3. Record Keeping
It’s easy to keep track of how much money you have. You will receive statements showing how much money you deposited and withdrew. Plus most banks and credit unions give you free access to your accounts online.
4. Withdraw Money Easily
It’s easy to get to your money with an ATM card or by making a withdrawal or transfer in person, over the phone, or online.
Now It’s Your Turn
As you can see, there are various types of saving accounts to choose from. Any of them will work, but some might be better for your current situation than others. Personally, I chose to open a money market account. This gives great interest rates and since I rarely pull money out of my account, the interest adds up over time.
If you plan on pulling money out of your account often then you might want to consider a regular savings account. The important thing is that you open up an account that is backed by the FDIC. This means every dollar you put in will be safe, so you can sleep well at night knowing your money isn’t going anywhere.