Many banks and credit unions offer various means of saving money. Each one of these plans or accounts has different requirements and benefits, giving individuals opportunity to select plans that will best meet their needs. A savings account is one of the more common ways that people save money. What is a savings account?
A savings account is a plan set up by a financial institution enabling people to save money and earn interest. The individual deposits money on a voluntary basis, often with no minimum requirements, and the institution agrees to pay interest on that account on a monthly basis.
Unlike most other forms of savings plans, the individual owning the account does have access to the money in a general savings account. This feature allows him or her to make deposits or withdrawals at any time without penalty. Some banks will issue a card with the account that can be used at an ATM so that funds can be withdrawn from just about anywhere.
When considering the question, What is a savings account?, there are two primary considerations that should be asked prior to opening a new account. The first one involves the amount of interest being given. Naturally, you want your money to earn as much interest as possible, so you should find out which banks near you offer the most interest on their savings accounts. Another thing to learn about is whether or not a bank calculates interest on a monthly basis or by basing it on daily compounded interest – which is usually the better choice. Online banks are also available.
A second concern is whether or not there are any monthly charges on savings accounts. Some banks have monthly charges on savings accounts, such as maintenance fees, or there are charges if the balance falls below a specified amount, which is often around $2,500.
Wisegeek.com mentions that when you are looking for a place to start a savings account, that you should check to make sure that it is FDIC insured first. This Federal agency provides coverage for your money up to at least $100,000. Most, but not all, agencies are insured.
When trying to find what is a savings account, it may also be a good idea to consider the various forms of savings accounts. Some banks now offer high-yield savings accounts, says FinanceBuddy.com, which generally provides higher interest rates, but many of the features are the same. These are more likely to be found at online banks, which can also make it somewhat difficult to get access to instant cash.
Most banks and credit unions today also give their customers online access to their account information. The information is usually updated frequently and transactions such as transfers or deposits can be made online.
Other forms of savings accounts will yield higher rates of interest, but with these there is usually a trade off with being able to have easy access to you money. Savings accounts such as CD’s or money market accounts will give more interest, but it will also lock up your money for months or years at a time.
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