Your Basic Guide to Savings Account

Keeping your money in the bank has a lot of perks. For instance, entrusting your money for safekeeping means watching your money grow. I bet you already know this. But there are different types of account you can choose from. 

Savings account is a type of account where you can keep your money safely. Specifically, this is the type of account where interests accumulate on the account balance, withdrawals can be made, does not require a minimum balance, and without a maturity date. This is a mighty good option for people who want to be prepared for emergencies and large purchases in the future. Most banks will require a maintaining minimum balance to avoid fees. It ranges from $25-$1000. 

There are two types of savings account.

• Passbook Savings Account-A record book is given to the depositor in which deposits and withdrawals are recorded.
• Statement Savings Account-The bank regularly mails a statement that shows the deposits and withdrawals incurred

Savings account rates gained a positive turn late last year. According to a recent survey sponsored by ING DIRECT USA, “43 percent of Americans are optimistic about their personal finances this year and listed among their most important goals: spending less overall, building up an emergency fund and earning enough to cover monthly bills.” Arkadi Kuhlman, ING DIRECT USA President, said that “Americans believe 2010 will bring some economic recovery.” 

This year is a good one to have a savings account with emergency funds. But wait, before looking for a bank, take a look of the variety of savings account offered. 

• Regular Savings Accounts-This is the type of account that yields interest on the money deposited. A depositor can withdraw from the account at any time without penalty and it is totally liquid. Banks link this to the depositor’s checking account for overdraft protection. It yields lower interest rate and lower balance compared to other liquid banks.  
• Instant Access/Easy Access Accounts-This is account is ideal for emergency fund. Usually this comes with a cash machine card for a 24-hour access of the depositor’s money. 
• Cash Individual Savings Accounts (Isas)-This is a tax free interest savings account but there is a limit of the amount that can be deposited each tax year. 
• Notice Account- This type of account has a higher rate of interest compared to easy access accounts but the money can be withdrawn on the notice period. Withdrawing before the notice period means a penalty and a loss of interest.  

Looking for a bank that offers a higher interest rate than others requires some considerations on your part. A high interest savings account may have restrictions such as when you can access your money. Compare it with a conventional savings account to know which of them is feasible for you. Another consideration is the legitimacy of the bank, be it traditional or online banking. 

Check if the bank is insured by the Federal Deposit Insurance Corporation (FDIC) and the amount of the coverage. Stop worrying when the bank is insured in FDIC. As long as you do not go beyond the limit, your money is safe in case the bank goes bankrupt. 

Savings account offers some advantages. It offers an easy access to money through the Internet, an ATM or a local branch office. Aside from that you can also open a savings account for your children below 18 years old and pay your car loan through your account which will be automatically deducted. Many banks offer health, medical, retirement, and education savings account. 

To find the best interest rate, nothing beats the method of shopping around. Never forget to read the terms and conditions of the account you want.