Do you know everything about savings accounts?
Probably the very account that everyone possesses is the basic savings account wherein you set aside some money on a periodic basis and it accumulates some interest however minuscule. Savings accounts are easy to open and operate and they are safe. It is very convenient to withdraw money from these accounts either directly at the bank or at an ATM. It is also very convenient to set up an automatic transfer of your salary to your account directly; this will ensure that you do not spend money carelessly as there is no greater pleasure than to see a growing bank balance.
Do savings accounts have any limitations
All savings account have a minimum balance requirement that must be always met to ensure you are not subject to additional fees. There are also limits on how many withdrawals you can do in one month. You must ensure that your minimum balance is maintained or you will end up paying more in fees than the interest you earn. Some banks, in fact, offer additional interest to maintain a balance more than required as an incentive.
Different types of savings accounts
- Regular savings accounts: You can open these accounts over the counter or over the phone and online. These accounts have low-interest rate and higher minimum balance requirement.
- Certificates of deposits: Almost banks with FDIC insurance provide these kinds of savings accounts wherein your savings are locked for a fixed period of time which can range from a month to several years. The interest earned on these savings is much more than that on regular savings accounts. They too have limitations on withdrawals and any preterm withdrawal will incur a penalty.
- Money Market Accounts: These are short-term savings accounts with higher minimum balance requirements but you will also be rewarded with more interest than regular savings accounts. These accounts are very safe because they are insured by FDIC.
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