Advantages of a savings account; If you are planning to open an account for yourself or your children, and you are not sure which account option to go for, this article will make known to you several advantages of a savings account that you probably never knew before. And it could be just what you are looking for.
What Is a Savings Account?
A savings account is a basic type of bank account that allows you to deposit your money and withdraw at any point in time.
It also has the added benefit of compounding interest that accrues for as long as the money is in your account.
Why Open a Savings Account?
Keeping large amounts of cash at home puts your money at risk of a lot of unwanted occurrences. It can get damaged by poor storage, your babies and pets, fire outbreak, or even stolen by burglars.
Having a savings account with your bank will provide protection for your money from all these and even more.
A savings account typically saves you from all the extra stress associated with ensuring that your money is kept in the best of conditions, free from extreme heat and humidity. All this will be handled by your bank on your behalf.
Is it difficult to open a savings account?
No, it is not! A savings account is easy to open and the process can be completed within a few hours or sometimes, even minutes.
Good thing is that you are not obliged to physically go to the bank to open an account with them.
All you have to do is to apply by using the online application of your bank. Though sometimes, a physical verification might be required at a later date.
Before opening your account, make sure you have ready, all necessary information. This includes government-issued identification such as work ID, driver’s license, military ID; Social Security number etc.
Your first step to savings
If you are a person that wants to cut down on your spending and develop a habit of saving to pay your debts, then keeping your money at home might not be a good option.
A savings account, as implied by the name ‘savings’, helps you to achieve all that, and more.
Savings Accounts are Insured by the FDIC
If you are in the US, it will interest you to know that savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC).
This means that your money will be safe even if your bank suddenly goes out of work for any reason whatsoever.
If such an eventuality happens, your money will either be made available for you to withdraw from the FDIC, or it will be deposited on your behalf into a new account opened for you at a different bank.
Nevertheless, this only applies to savings of up to $250,000 per depositor and per single category.
This is not the same for accounts that are not covered by insurance policies. And in such situations, closing down a bank, automatically translates to losing all your hard-earned money.
Your money is always available
Unlike some bank account options that require tedious procedures and paperwork before withdrawing money, 24/7 accessibility to your money is among the cool advantages of a savings account.
You can withdraw from your savings whenever you want without having to pass through the rigorous procedures and delays.
There are several options for withdrawal too. You can make withdrawals via ATMs, online transfers, or you could just walk into the bank and request for your cash. It’s cool right? Yes I know.
Opening the Account Doesn’t Require a Big Initial Investment
You do not need to be a wealthy Silicon Valley CEO before you can open a savings account.
Many banks will allow you to open an account with them starting with a first deposit of just $25. Some financial institutions will even go as low as $1.
This means, you can start saving with the little you have at the moment, as you aim for much more in the future.
With this option, even your kids can have their bank accounts. And this will inculcate in them a habit of saving, in a world where many are in debt as a result of poor saving habits.
A Savings Account Offers You High Liquidity
A savings account also offers you liquidity which is much higher than that offered by current accounts and other assets like estates, vehicles and the likes.
Liquidity simply means how quickly and easily you can get access to your money whenever you need it.
Apart from being very important in times of emergencies, it can also prevent you from losing important opportunities that will require you to have quick access to your Savings.
Quick Payment of Bills
When you have a savings account, bill payment becomes really easy.
Many banks allow their customers to automatically pay bills out of their savings account without having to go through the rigors of cash withdrawal.
With just your ATM card, or bank phone app/software, you can make payments wherever you are without being subjected to carrying loads of cash with you. Plus, it makes payments much faster.
Your Savings Will Grow
Among the advantages of a savings account is the nominal interest that will be added to your savings.
While the interest might seem so little, keeping your money at the bank for a long time can generate you some additional cash.
The interest rate depends on the state of the economy and the financial institution you are banking with. This could be paid to your account monthly, quarterly or yearly.
So when you have long term plans for your money, a savings account is definitely your best bet.
The advantages of a savings account cannot be overemphasized.
It helps to keep your hard-earned money in good hands. While at the same time offering you the flexibility of quickly accessing your money and making payments wherever you are and whenever you want.
In addition, the compound interest remitted to your bank account ensures that your savings do not just stay stagnant, but instead, grows with time.
We believe that you no longer have doubts regarding savings accounts and that you and your kids are willing to give it a try.