A Look at a Bank Savings Account

A Look at a Bank Savings Account - image

 

Most of us are already aware of what a typical bank savings account entails. These are used to amass money over time thanks to agreeable interest rates when compared to a checking or debit account. However, it is still a good idea to take a quick look at the fundamentals associated with savings accounts as well as why they could be an excellent option if you have been hoping to grow a financial nest egg over time. We will then examine how to choose the best one as well as what to ask when consulting with a customer service representative.

 

The Mechanics of a Savings Account

As the title already suggests, the main intention of a savings account is to provide you with a safe and secure method when storing your money. However, keep in mind that these accounts are generally NOT used to withdraw money from a typical cash point. This is not their primary purpose. They are instead designed to provide you with an extra wealth management option. This is why savings accounts will offer higher interest rates than checking account. Such rates are defined by an APR (annual percentage return) and higher values naturally equate to higher returns over a set period of time. These rates can either be fixed of variable in their nature. It should also be pointed out that the minimum account balances of savings accounts are slightly higher, as you might otherwise incur surcharges and other penalties. This is also why it is always a good idea to compare and contrast different providers so that you will be able to make an informed choice.

 

Why are the Associated Benefits?

Savings accounts represent a stable form of secure income and yet, they are more liquid than traditional holdings such as certificates of deposit (CDs) or stock portfolios. This is why savings accounts are often used in conjunction with these other methods. One common example is an individual savings account (ISA). Other benefits include higher rates or return, more flexible underlying assets (assuming that you have been presented with stock options) and the possibility to perform penalty-free transfers between this account and other accounts associated with the same bank.

 

Questions to Ask When Opening an Account

Always be sure to ask about the associated interest rates and whether these are fixed or variable. Secondly, it is wise to have a clear understanding of any associated penalties or fees if you are required to perform a transfer on short notice. Will you be provided with an online means to access your account and what type of encryption software is used?

 

Things to Look out for in Advance

Be vary of accounts that are attached with high deposit or withdrawal fees. The same holds true in regards to lower interest rates or few points of customer service contact if you run into a problem. Finally, it is always best to be vary of a bank that has received a fair amount of negative online reviews and similarly poor feedback.