A savings account is a must for anyone who wants to have financial security and a well diversified financial position. Cash saved in the right place and time ultimately gives you the helping hand in emergencies and unforeseen circumstances while earning a competitive interest rate. Saving money in a bank savings account is the first and one of the most simple options available for anyone who wants to save for the ‘rainy days’ while reaping a good real rate of return.
First of all, money put in a savings account is safer then that kept in many other investment choices. The Federal Deposit Insurance Corporation provides an insurance coverage for your sum up to $250,000.00 for each type of deposit made by any person per bank. So you can assure yourself that the money that you are depositing in a bank savings account is in secure hands.
The next advantage in opening up a savings account is the liquidity that comes with these bank accounts. Liquidity is a term that represents the ease with in which you can access your money kept in any investment or turn that investment into usable cash equivalent funds. Liquidity is at its highest for savings account when compared to any other form of account since your money can be taken out of the savings account at your leisure with very few limitations.
Savings accounts are best suited for individuals that plan to regularly save and may be looking forward to major expenses in the future such as paying your college tuition or making a major purchase within a short time span. This is the best place to keep your money safe while it will earn some interest on the balance on deposit with the bank.
Due to a competitive banking environment, the days of subpar savings account interest rates are no longer the norm. High yield savings account or high interest rate savings accounts are becoming much more bank products and are marketed heavily by some local banks, big banks and online banks.
For better money management, savings account holders can often link their savings account to a checking account. With this option, the savings account holder can make payments through the check account by transferring funds from the savings accounts without the need to physically handle the cash. This option allows the checking account holder to earn a greater rate of return by keeping their money in the higher yielding savings account until the funds are needed.
Some savings accounts provide online banking options offering even greater flexibility in handling the savings accounts and linked accounts such as the checking account. Thus you can check your account balance, make online banking transactions and get knowledge of other offers from the comfort of your home or workplace. Online banking is a great feature with savings accounts, and most banks now offer this service.
When used as savings resource for unexpected events and expenses, a savings account should balance should be monitored to balance your needs as your lifestyles changes. Ideally your savings account should have enough funds to sustain you for at least six months. One of the greatest challenges in keeping a good financial plan is to preserve the principal invested. Often this gets the backseat when it comes to spending habits. A savings account helps to build and maintain good spending habits. A minor savings account can be opened for your children to teach them the basics of banking and guide them through responsible spending patterns.
Savings accounts are easy to open and have very few requirements before they pay interest on your funds. Savings accounts generally earn interest on the full amount that you keep in the account. Some savings accounts may have minimum balance requirements and/or minimum opening deposit requirements. Although most savings accounts pay interest on the first dollar held in the account some bank savings accounts earn interest on a tiered balance structure. With a tiered interest rate, the savings accounts will pay higher interest rates at predetermined higher balances. Online savings accounts may offer higher interest rates due to their reduced costs of operation.
The savings accounts not only serve as an emergency reservoir of money but with savings accounts that pay high yields and high interest rates, these accounts earn a competitive rate of return in the class of liquid and risk free assets.
Compared to a bank certificate of deposit, the savings account is better for short term investments. Bank CDs often yield higher rates of interest provided the time frame and/or the amount deposited are high enough. A savings account can be found that offers a high yield which can compete with a bank CD and the savings account is far more liquid.
For more information on the top ten savings account rates or money market account rates please see Money Market Account Rates or Savings Account Rates. To see more information on the best online banks refer to Best Online Bank and to see some of the best online savings accounts available see Best Online Savings Account. Current Bank promotions and deals can be found at Bank Deals.
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