Savings Accounts Defined | Pros & cons
Savings Accounts are accounts where banks provide you with a safe place to store you money. They often can offer higher rates The incentive for banks to provide you with this type of bank account and means to access it, is they to use those funds to make loans to others or make investments. The bank then gives you a portion of their return on your money and keep the remainder as payment for their services. Savings accounts are free. Savings are accessible and liquid ways to safe-keep your money. The pros side of a savings accounts is that most banks do not charge any monthly fees for your savings account. However, the cons side is that savings account do not offer checking or debit cards services. Money market accounts usually offer the checking and debit card services, but sometimes offer a lower rate than savings accounts. Savings accounts are used primarily to save your money and make interest on your money.
Low Savings Rates Versus High Savings Rates
Some banks offer ridiculously low rates for their saving accounts and other offer very generous rates compared with the national average of bank rates. So, why is it that an online bank usually outperforms a local bank's savings rates? In most cases, an online bank specifically targets those customers looking to get a higher return for their dollar. Local banks are there for convenience and know that they can attract customers just by having a physical location. online banking accounts have become a large niche in the banking industry. Some banks have created smaller institutions and given them the specific role of managing online savings accounts. There has been a trend for online banks to create a very high savings ratesand competitive rate to attract new customers and fill a quota. After they have received enough customers for their purposes they sometimes drop the rate. If you are comfortable switching banks then you can move to the one offering the best rate and when the lower the savings rate, switch to another bank with the highest rate. Rates are
FDIC Insured Saving Accounts
The top savings account are insured by the Federal Deposit Insurance Company. When a saving account is insured by the FDIC it guarantees the deposited amount up to a specific amount. Savings are one of the safest places to store your money. If your savings at home in cash form, they could be stolen or in a fire. At the bank, they are insured. The safety found with saving your money at the bank is the one of the benefits.
Daily Compounded Savings Account
Saving accounts which compound interest daily, maximize your earnings more than those that compound quarterly or annually. This is more common but it is always best to make sure the bank what compounding features your offers.
Withdrawing from Savings
It is a regulation of federal law that electronic transactions or phone transactions from USA savings accounts are limited to six per statement cycle. If you would like more, then first of all, that isn't what a savings account are for, and second, you will be fined per each transaction after the allotted six from your account.
Summary of Saving Account
A saving account is one of the best places to store your finances. It gives you peace of mind knowing it is FDIC insured, earning interest, and easily accessible without the fees that would be incurred with a cd account. Savings accounts have been in business for a long time and are not going to be going anywhere anytime soon.
