An account that allows you to keep your money and other funds save so you can meet your financial needs. Most banks offering such accounts are insured by FDIC.
Reasons why you should have a saving account: (1)
It is the most known account where everyone would like to invest in. The saving account can be used for different purposes and purposes vary from person to person. You can select saving account options according to your requirement. Here are the reasons why you should have a saving account:
- Save avenue for funds:
It is the best option that keeps your funds protected. Your funds will stay in the account until or unless you withdraw them. Saving accounts usually demand lower interest rates so you can save more money. A saving account is like a liquid as you can withdraw your money up to a certain limit in a month or a week. This is very important to the employees working on salary and seniors who can transact a specific amount to fulfill their monthly needs. Saving accounts are also insured by the certified corporation.
- Provides special value-added services:
Value-added services are also offered with the combination of saving accounts nowadays. You can get a special discount when you purchase any product with the associated merchants or you can get cashback on spending a specific amount in the certified period with your ATM or DEBIT CARD.
Many banks offer medical insurance in case of an accident and travel insurance when you open a savings account. You can use all these value-added services when you choose your savings account bank wisely. Other facilities are also offered with saving accounts such as checkbooks, net banking, and passbook.
- A place to collect funds and make payments:
It is the best place where you can collect funds from several sources. No limit is specified when you deposit money with a cheque for a savings account. You can issue as many cheques as you want from saving accounts. All the process is haste free and very easy to manage.
- Income-generating account:
You have to pay the interest rate on your savings account, unlike the current account. Your income can be improved by balancing the savings account. If you want to maintain a high balance you have to pay a high interest rate according to the bank’s policy. Some banks are available that offer low-interest rates so you can save more money.
- Can help plan your child’s financial future:
You can save money in a savings account to protect your child’s future. Saved money can help them in their education or other purposes. This will also help your child to learn about the basics of a savings account and how important it is to save money for the future.
Types of saving accounts with pros and cons: (2)
Several types of saving accounts are available but it is very vital to choose the right option for you. Types of savings account with pros and cons are as follows:
- Traditional or regular saving account
It is mostly used by people who intend to save their money for a short or long period without focusing on the interest rates.
Pros:
- It can be easily open at any branch of the bank and some banks offer to open a savings account online.
- You can grow your money by earning a high-interest rate according to your savings.
- You can consult with the branch if you face any issue or wants to deposit money in the account.
Cons:
- When compared with other options of saving account, interest rates for this type is usually low.
- Your interest earnings can be canceled out with a maintenance fee after a month.
- You can be charged extra if you withdraw an excess amount from the account.
- High yield savings account:
It is recommended to people who intend to earn more interest rates on the money while minimizing the maintenance fees.
Pros:
- The high-interest rate can be earned as compare to other savings account.
- Online Banking requires a low limit of deposit for account opening.
- The monthly maintenance fee is low for an online account.
Cons:
- You don’t need to visit the branch for deposits as you can do it online.
- Transferring money from your saving account to other accounts may take few days to complete the process.
- Sometimes you are unable to access your money with ATM.
- Money market accounts:
It is recommended for people who wish to earn more interest on their money but keeping all the access to their money.
Pros:
- This type of savings account offers more interest rate as compared to other traditional savings account.
- You can use a cheque or ATM to withdraw your money.
- This account can be easily opened in a traditional bank or online.
Cons:
- A huge amount is required to open the account.
- If you want to earn higher interest rates you need to bind your larger payment.
- The monthly fee is charged by the bank for money market accounts.
- Certificate of deposit account:
It is recommended to people who want to earn a high interest rate but are not much interested in access to their money.
Pros:
- It benefits people with short or long term goals with high interest rates.
- You don’t have to pay a monthly fee for the maintenance of accounts
- For online banking, you have to pay fewer amounts for account opening.
Cons:
- If you withdraw money before the maturity period you have to pay the penalty for that withdrawal.
- The interest rate for traditional banking is lower than online banking.
- You have to save a large amount without having much excess to them.
- Cash management account:
It is recommended for people who save their money to invest in brokerage.
Pros:
- Easy to save your money for future investment
- Features available for checking and saving account
- Accounts are insured by the third party.
Cons:
- High yield saving accounts are better than this account
- You don’t have access to the branch banking
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