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Benefits of Opening a Savings Account

Kanika Khara Jun 30, 2019
A Savings account is one of the best ways to manage and save your hard-earned money. Keep reading to find out how to open one, and what are its benefits.
A savings account not only provides a safe and convenient place to store your money, but it also serves you in building your savings. One of the main advantages of a savings account is the interest you receive when you save a certain amount of your money in that account.
The bank pays you a percentage of interest on the money, so that they can use it to lend it further as loans. For example, if your interest rate is 3%, and you have $2,000 in savings, then you will earn $60 annually for that money.
Though this amount seems a bit low, but more money in your account with a higher rate of interest will result in a higher pay-off at the end of the year. The rate of interest primarily depends on the bank you choose.

Choosing a Bank

Firstly, choose a suitable bank before opening an account,. So, research and zero down on a couple of banks that have a branch closer to your home, and offer a good rate of interest. After listing out some good banks, find out which bank offers the best service.
Here is a list of points that you need to look into:

✦ Some bank's require you to always have a minimum amount of balance in your account; they have the right to penalize you otherwise. Hence, if you opt for this type of a bank, make sure to maintain the required balance in your account.
✦ Some banks may charge you for withdrawals, transfers, etc, so check the conditions that are applicable to any account opened with them.

✦ Each bank has a different set of rules and regulations regarding the access to your money. Though most banks don't permit you to write checks with a savings account, some may let you withdraw money from an ATM card.
✦ Online banking, conducted through online banks without any physical branches, often expect you to transfer money back into the account before you can access it.
Thus, before choosing an account, don't forget to consider how often you may need to access your money.

Open your account in the bank whose services appeal to you the most.

Managing Your Account

✦ Add money regularly into your account, as this will not only increase your savings, but will also help you to avoid penalties.
✦ The account will be considered dormant after three months if no money is deposited, and will eventually get closed if it goes more than a year without any deposits.

✦ Getting a Certificate of Deposit is a good idea to save some money and earn some interest without being continuously worried about your account's inactivity.
✦ If you need to withdraw money very often, then opening a savings account is not a wise idea, as the government keeps a check on the number of withdrawals you're permitted to make each month. Opt for a checking account to access your money without any transaction limit.
Starting a savings account is a significant part of any responsible savings plan. Since there are various options available, getting started with opening one and understanding how it works may prove to be a bit complicated.
Whether you're a high school student, planning to open your first savings account, or as a retiree trying to get the most out of your savings, trying to search for the right bank with the right account, is important.
Therefore, collecting all the possible information will put you on the right track to open a savings account and start saving!