Advantages Of A Savings Account

Answer 1

In today's uncertain times, having a savings account carries a lot of benefits. Many people don't have a savings account or have one they don't often use. A savings account is something that should be considered however. There are several different types of savings accounts. You can open one at your local bank, open one online, or opt for a CD or money market account. Here is a look at some of the benefits of a savings account.

The best benefit may be that your savings accrues interest while it sits in the bank. Even the most basic savings account accrues a small amount of interest. Online savings accounts provide higher rates, and CDs and money market accounts provide even more. This is money that you get for doing nothing. Money in savings accounts is FDIC insured and guaranteed. You don't have to worry about ever losing it.

Another benefit of a savings account is that it helps you plan for long term financial security. You can do this with a regular savings account where you have access to the funds whenever you need them. You could also set up a long or short term CD. A CD works by depositing a set amount in which you can't withdraw until a certain date. This is good if you want to plan for something like college. You won't touch that money until the maturity date and in return you will get better rate of interest. You could also open up a short term CD to gain some extra money. This is good if you want to plan for a wedding or vacation.

Another advantage of a savings account is the ability to save money for emergency situations such as car repair or housing projects. Unlike a checking account, savings accounts usually don't let you pay your regular bills online. You can obtain a debit card, but it won't have a VISA or MasterCard logo. This helps you save money in case you need it down the line. However, you can withdraw money when you need it. If you have an online savings account, transferring money is very easy and often is done in an instant. Money market accounts allow you a certain number of withdrawals a month. So while savings accounts aren't designed to be withdrawn from regularly, you can get money when you need it. Consider setting up your payroll direct deposit to send a small amount of money from each check in to a savings account. That way it will sit and accrue interest until you need to use it.