A savings account is defined as a deposit account opened at a financial institution or a bank that allows the account holder to store sums of money that earn interest over time. It is one of the safest means to invest your money. Additionally, it is financially more beneficial to store extra funds in a savings account as compared to a checking account. There are almost no risks involved with this type of account.
Some of the benefits of a savings account and what makes them an appealing option are:
- The primary benefit of a savings account is earning interest. The bank or financial institution offers a yearly rate of interest in exchange for providing the service of holding your funds. This rate may change as it can be affected by various factors, such as economic environments and government regulations. However, savings accounts always allow you to earn interest on your deposits.
- A savings account allows you easy access to your money. During an emergency, you are free to withdraw your funds to cover expenses. Today, most banks offer customers the ease of online banking. Many banks also allow you to link one account to other accounts, enabling quick and convenient funds transfer.
- Savings accounts that are under the protection of government insurance ensure that your parked funds are safe. For example, the National Credit Union Share Insurance Fund insures the credit unions, and the Federal Deposit Insurance Corporation insures the banks. Therefore, you can rest assured that your money is stored safely.
- A savings account offers you the benefit of liquidity. Withdrawing money from the account can be hassle-free as it allows you easy access to your funds. Whether it is via online banking, bank tellers, or ATMs, you can withdraw funds as and when you need. A savings account offers higher liquidity than other investment vehicles like stocks, certificates of deposits, and bonds.
- A savings account involves no risks. It is one of the most preferred and safest means to invest your money without suffering any risks. It also offers you the option of putting your money into other investments as and when an opportunity arises. For example, should you be interested in renting a property, you can utilize the funds in your account to make the down payment or even purchase the property.
- Savings accounts can be linked to other accounts, such as a checking account. Several financial institutions and banks offer this facility for your benefit. Money can be then transferred between the accounts whenever one of them runs out of funds. By doing this, you can reap the benefits of avoiding any overdraft charges and other fees.
With so many benefits, a savings account in today’s time is necessary. You can choose from a range of banks in the country to avail of these benefits.
