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Who doesn’t want to enjoy a surplus amount of money and not fret over the future?
Surely, everyone wants to manage money in a way that builds up an emergency fund, helps with major financial goals, fulfills their retirement account, and doesn’t hurt the credit score at all.
This is the reason why savings accounts were invented for people all around the world.
So, if you are new to saving money and everything in between and want the right guide to your savings account, we got you!
Below is everything you need to know before opening a savings account.
Disclaimer: #2 Is A Must-Read For You!
Savings Account: Definition & The Basics!
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You never know when this life knocks on your door and asks you to pack your bags and leave for a
- New house
- New job
- New City
- New Country
- Or, something no one wants to talk about.
Once you sit back and start thinking about all these factors, you can’t help but think, “how do I secure my future?”
Will I make it to a stable future? Or, do I have to struggle even when I'm old?
Well, when it comes to people who are earning or into money-related goals, the answer often turns out – having enough money to deal with the uninvited emergency.
This is because this saved money helps you with
- Renting a place for the time being
- Bringing fulfilling food to the table
- Paying bills
- Paying for the medical emergency
And the list never ends…
Of course, that’s understandable. However, the concept of being financially secure varies from person to person.
But the main question is, how to save up enough to brave yourself for what is to come in the future?
This is where savings accounts come to your help!
According to a widely accepted definition,
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“Savings account is one of the safest places for your money to be saved for future use and be kept from today’s extravagant spending.” |
Not only that, but it can also earn you interest on the saved money, which will be counted as your taxable income.
Many banks take special precautions to ensure as much ease and flexibility for their savings account users. Therefore, you will hardly find any rule of thumb related to the deposit you can make.
On the other hand, banks do limit the number of withdrawals from your savings account.
The type of withdrawals include:
- Any transfer to a checking account
- (EFTs) electronic funds transfers
- Automated transfers for your house’s clearance
- Transfers that are done through devices like a mobile phone, fax, computer, etc
- Wire transfers
- Transfers made through a check or debit card
Moreover, if you exceed your limited number of withdrawals, you will be charged according to the bank or credit union’s rules and regulations.
Here watch a video that guides how you can enjoy the perks of money:
Now the question arises, how do you know which type of account is the right choice for you? Let’s find the answers in the next section:
Is There Only One Type Of Savings Account?
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The answer to this question, if we put it in simple words, is that NO, there is not only one type of savings account.
However, this information is pretty surprising to not only one but people.
Therefore, mentioned below are the types of savings accounts you can look into to choose which category you fall into.
1. Standard or traditional savings account
As the name suggests, a standard or traditional savings account is typically one opened by a brick-and-mortar bank.
This makes it a lot easier to access any physical branch. Moreover, interest rates are generally low, making it a relatively low way for your taxable income.
2. High-yield savings account
This type of savings account brings you one of the highest turnovers in terms of interest-based taxable income.
Moreover, online banks offer relatively low fees to keep the customer’s trust intact.
3. Money market account
Unlike other accounts, a money market savings account comes with a higher opening deposit, making it less feasible for many people out there.
4. Certificate of deposit account
If you are someone looking for a savings account that can hold up your money for a longer time period without any changes in the rules, then this type of savings account is for you. Plus, it brings high-interest rate value for you.
5. Kids’ and student savings account
This type of savings account is specifically designed for students at any level of study. Due to this reason, it brings flexible withdrawal, deposit, interest rate, fees, and charges policies.
Related Article: Build Your Credit As A Student For Good Interest Rates!
It would be worth noting here that there are many other types of savings account, but overall, mainly savings accounts cover the above-mentioned types.
Okay, enough with the types! It’s time to know why savings account are the talk of the town:
Here’s Why It Is Worth The Hype (9 Benefits)!
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Now that you are done with the basics and types of savings account, it is time to hop on the benefits this account brings to not only one but many people around you.
These advantages include:
- It plays a crucial role in achieving your financial goals, just like a secured credit card does to improve your credit score
- You earn your fair share of interest
- It turns out to be one of your passive income streams
- It makes it more convenient to save up money
- There are less and less chances of fraud
- You are offered a safe and consistent rate of return by the savings account
- You keep your money habits in check
- You steadily save up for your retirement life
- You are always prepared for the future with your emergency fund
Other advantages also include that you can open a joint account or choose not to withdraw money from an ATM, etc., for added money-saving benefits.
Sheesh, that’s a lot of good benefits. You might want to open a savings account for yourself, family, or even kids now. Right? How to do so? Let us guide you through the process! :)
Tips On Opening Your First Savings Account
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Opening a savings account is undoubtedly the best decision for your finances. But, with so many banks offering similar benefits, you might get confused.
Especially, if it’s your first time opening an account. So, here are some tips to ensure you get to choose the right option:
- Set clear milestones or goals you want to achieve by the end of a year or two. This will help you make the right choice in terms of the type of savings account.
- Never settle in one go. You owe it to yourself and your future financial goals that you do your own thorough research and then choose the right option.
- Make sure the bank or the credit union has a good record of keeping the money safe instead of the other way around.
The goal for opening a savings account is protecting your money while earning interest on it.
You don’t want to fall into a scammy trap just because you didn’t research the bank thoroughly. Getting our point? So, yes, that’s important!
Conclusion
Savings account can help you a lot, especially when you can’t save up money on your own.
In fact, they can put your money into the right direction so that you can enjoy your present and future.
However, knowing everything about it before opening one is more crucial than anything else!
Yes, you need to do your homework to decide what savings account is the best. Intriguing? Read the complete guide to find 5 types, 9 benefits, and 3 tips you need to open the right account!
