Most people know what a savings account is: it’s a bank account that is offered by most banks and credit unions that allows people to deposit money in for safe keeping. By you depositing money in a savings account, you are actually helping the bank make money. The bank uses the money you deposit to make loans, and in exchange for this, the bank pays you interest on your money. To get depositors, banks essentially put their savings accounts on offer by showcasing as high an interest rate as possible. But what are the benefits to you, the depositor, for putting your money into a savings account?
Safety and Security
The biggest reason to get a savings account is the safety and security of your money. If you have a large sum of money, you shouldn’t be keeping it in your house under your mattress. That just isn’t safe – you open yourself up to the potential of being robbed.
By putting your money into a savings account at a bank, you keep your money safe. Furthermore, your deposits will be insured up to the FDIC limit, so you don’t have to worry about your money being lost if the bank goes under. This makes it a perfect solution for an emergency fund.
Next, savings accounts pay interest on the money your deposit. If you just keep all your money at home, you won’t earn anything on your stash of cash. By shopping around for a bank with a good interest rate, you can earn a reasonable rate of return on your deposit. This can be a good, secure, source of income, especially once you retire.
Finally, having a savings account allows for flexibility. You can have your savings account be the central hub of your finances. You can setup direct deposit to have your paychecks deposit into one. You can also easily transfer money to a checking account to spend as needed. And since you own the account, you can always withdraw your money from the savings account whenever needed.
Post by Robert