Those who work hard towards achieving financial security are the ones who are most rewarded. Aside from the usual monthly expenses that you need to allot money for, there should be an emergency fund from which you can draw in case of a financial emergency that may crop up. A savings account is a great way to start toward your goal of handling your finances better. Take a look at the following savings account basics to get an idea of how a savings account could benefit you.
What is a savings account?
A savings account is probably one of the simplest accounts that a person can have. Savings accounts are maintained in commercial banks and other financial establishments such as credit unions. Think of it as a piggy bank where you can keep funds that you do not immediately need to gain access to. One good thing about maintaining a savings account is that you will have a secure place where you can keep your money with the added bonus of earning interest. This interest is the reward that banks pay its depositors for keeping their money with their bank. The records for a traditional savings account can be kept on a bank book or passbook, while other banks issue an ATM card that can be used to withdraw money, and the transactions can be seen through a bank statement that the financial establishment sends to its depositors.
How do I go about opening a savings account?
Before officially opening a savings account, visit a local branch of a credit union, commercial bank or savings bank in your area. It pays to shop around to find the best savings account available to you. Some financial establishments offer general service charges for opening a savings account. Check out the interest rates for opening a basic savings account, which might differ from one establishment to another. Also, some banks will require you to maintain a required minimum balance. If your savings account goes below this amount, you will be charged a fee, so it is best to look for one that offers a low balance requirement or one that does not have a balance requirement at all.
What are the benefits of maintaining a savings account?
A savings account is a safe and risk free way to save your money. It is secure in the sense that the bank will be the one responsible for safekeeping your deposits. You will also have easy access to your savings account. If you need to withdraw money, you just need to pay your bank a visit to make a withdrawal or use your ATM card, if the bank issued you one. Finally, one of the most important benefits of maintaining a savings account is that it earns interest.
Interest refers to the amount of money that your deposits earn if you store the funds in a savings account for a particular period of time. Interests are paid by the bank as a 'reward' for depositors who choose to maintain a savings account with them. The rule of thumb is the higher the interest rate, the more money your deposit earns. Also, a bigger deposit equates to more interest earned. If you learn to manage your savings account well, it could turn out to be a good way to earn a bit of extra income each month.
How can I manage my finances better once I open a savings account?
The key to making a savings account work for you is to deposit as much money as you can and to let the interest pile up. The more money you deposit, the more you will earn in interest. You should also check out the different types of savings account available for you so that you can choose the one that will suit your financial needs the best.
Practice good money management by keeping personal track of the deposits and major withdrawals that you have made. Once your monthly bank statement arrives, compare it with your personal records, and immediately call them once you see any discrepancies.There are hundreds of savings accounts available with a range of interest rates and features.