Money is important to people living in communities all over the world. It is used as a means of transaction, for your services and work, to get products or other services, or pay someone for work. Money is often spent on things like food and drink, necessary for our survival, as well as other commodities like the internet, computers, cars, boats and other luxury items.
Some people prefer saving money, so that they can either invest it later or simply have it if things get dire at a later point in life. But what exactly are savings accounts? Following is everything you need to know on savings accounts.
What is a Savings Account?
This is one of the most basic accounts you can get. It is recommended to get one, especially if you have money which you do not plan on spending anywhere in the near future. Most savings accounts are free but they require you to have a minimal amount of money on it so that you are not charged any monthly fees.
Savings accounts are special because you get money just by having money. You are paid an interest by the bank or union or whoever is the host of your savings account. Your deposits are paid and you get more money. You can withdraw money at any time from your savings account but it is often recommended not to, because it is indeed a savings account.
Are There Different Types of Savings Accounts?
Yes, there are. The first one mentioned was a traditional savings account. It may or may not have monthly fees, but the interest rates are quite low. The next one would be a high-yield savings account, which has much better interest rates, yet you might not be able to withdraw your money immediately or at ATMs, depending on the bank.
Money market accounts have higher minimum deposits and they are more often charged on a monthly basis. The interest rates might be in tiers, meaning that the more you deposit, the more you earn after you cross over into the next tier. These accounts have flexible withdraw options.
When You Should Open a Savings Account
The answer is, as soon as possible. Having a savings account is great for everyone who has any sort of income. If you put money aside, and it is in a bank, which would require you to do multiple steps to withdraw it, it is far less likely to be spent than cash lying around or that credit card which just never seems to have any money on it.
Savings accounts are great for everybody with relatively stable income. Once you pass the threshold and if there aren’t any monthly fees, you should be well on your way to earning more money as time goes by.
Online Banks or Brick and Mortar Ones?
This is something which you should answer for yourself. Online banks are great, if you can use their cards on ATMs and withdraw money without having large fees. On the other hand, brick and mortar banks are secure and if it is an international bank, you should be able to find their ATMs everywhere in the world and their cards will work almost everywhere.
Online banks have more flexible accounts options, while regular banks might not.
With this knowledge, you should be able to grasp what a savings account is and maybe even open one of your own.