It is unfortunate to know that these days many of the people are not having some type of savings account plan to their name. Most of us are just living paycheck by paycheck and simply depend on credit in order to get by.
Credit card companies and banks are encouraging to use credit for paying everything. The behind this is that to buy today and worry about finances tomorrow. And we all take it hook, line, and sinker.
It is best to save your money in bank instead of just saving your funds in a safety deposit box at home, which does not earns any interest and simply not growing at all. By saving your funds in a bank, your money is insured and you can even earn interest on it.
Savings account is the most common type of account, which is offered by banks. It is even the preferred account by most of the people because it earns a higher interest than other normal accounts like online accounts, ATM accounts, etc. However, it is best to have some type of savings account to your name.
People who are interested in opening savings account can go to financial institutions to inquire whether the savings account services offered by them are good or not. The best places for opening savings account are commercial banks, mutual savings banks, credit unions, savings and loan associations, and other local financial institutions.
In general, most of the people maintain savings account to get good interest on their money. A passbook is used by most financial institutions to document and track the savings account of an account holder.
They use the passbook for monitoring its earnings and principal. There are even other financial institutions that provide bank statements to their clients, which specify the financial transactions made.
Savings account is almost cash in that you can make purchases. But unlike credit accounts or debit accounts, savings account cannot be used directly as money; you need to write a check. Instead, in a savings account, keep aside a part of your savings, in order to make purchases at a later time.
Meanwhile, you can earn interest on your savings, which are applied and added to your account. As a result, your savings are growing without doing anything with it. Thus, savings account is definitely a better way of saving money.
Certainly, interest is the payment given to you by the bank for using bank your money. In fact, technically speaking, you are not depositing your money with the bank, even though the process is known as deposit.
The relationship between you and the bank is just like a contract of loan. Here, bank is the borrowing money and you are the lending money. Therefore, you are actually lending money to the bank, when you are depositing money into your savings account.
The money deposited by you will be utilized by the bank in different profitable investments. Bank will pay you interest and apply it to your savings account in return for the temporary usage of your money.
The money in your savings account can be withdrawn anytime. Withdrawing can be done using your savings passbook or using your ATM card.
You need to visit to the bank for withdrawing your money, if you are using savings passbook. There are some banks, which allow you to withdraw money only from the branch of the bank where you opened your savings account. And other banks allow you to withdraw your money from any one of their branches.
You can even withdraw cash through an ATM with ATM cards. Nowadays, you can find ATM everywhere. It is much more convenient for the account to get a hold of their money with ATM.
You can withdraw your money with going to the bank in order to get cash for purchase with ATM. Thus, you can enjoy the convenience of credit cards without worrying about payments for all your purchases.
Difference between Savings Account and Other Accounts
The difference between savings account and other accounts is that the funds in some of these savings accounts must be kept for a certain period, in other words a savings account holder can use his funds only before certain period of time; even though unlimited use or access to these funds is permitted by many most savings accounts.
Another favorable difference is that a higher interest rate is offered by savings account than any other demand deposit or money market accounts.
Things of Consideration
A savings account like other bank accounts, deposits, products, services, or investments, must be maintained within the parameters and regulations of government and bank. A savings account may also have some restrictions or limitations on the deposit, withdrawal, or transactions.
Therefore, make sure that you understand the terms and condition for opening and maintain a savings account before hand. When you have decided to open a savings account, find the financial institution that is safe to keep your funds.
You should consider the reputation and background of the financial institution, and most significantly, find out if the financial institution follows and observes the country’s deposit insurance policy, since by any chance, if that institution defaults or bankrupts, you will know at least if you still have your money or not.