Basically, a savings account is a deposit account for an individual held by a financial institution or bank. You can deposit a certain amount of money for a modest interest rate. You can also access the money when you need it and if the terms of the bank allow it. Savings accounts are one of the conservative investment options and help you store your extra cash safely within the bank. However, the banks charge you a certain additional fee when you want to make withdrawals and they can charge you an additional fee to maintain the average monthly balance in your account. While it does come with a few drawbacks, a saving account can be very beneficial to many people.
Here are a few benefits you get from saving your money in the bank
There are interest rates imposed on your savings
This is the first benefit you get from having a savings account. It earns you some interest on total money you deposit. Basically, it earns you and pays you a certain level of interest. The interest is calculates by multiplying their given interest rate with the amount of money you deposit or is maintained in your bank account. The interest rate can change from time to time depending on the activity of the economy and level of labour in the market.
Your savings can solve your purpose
This account keeps your deposits very separate. You can keep cash in hand, checking accounts or money for long term investment in one account. You have freedom to keep regular deposit on the savings account and watch it grow. This can help motivate you to save more for an intended purpose in the future. You can save to purchase a home, start a business, and buy a car and a lot of other reasons. If you need to save money for different goals, you can do it in different savings account and this will simplify your book keeping.
You have easy access to your money
You can easily access the money that you have deposited in your savings account. In case of a financial emergency, you have the freedom to withdraw your funds so you can clear the unforeseen expense. Most banks will provide you with an online access of the funds 24 hours a day. Some banks will allow you to link the account to others so you can have a quick transfer of funds during these emergencies.
Banks keep your money safe
Savings account in any institution or bank that is under government insurance will keep your money safe. They ensure that all account holders and their finances are in safe hands. They also have protocols to ensure all individuals get their money in case of any financial issues.
There is minimal risk involved
Savings accounts are probably one of the safest way to store your money and with very minimal risks. It provides the opportunity to put your money in a major investment when the opportunity presents itself. You can purchase a home, vehicle, land, pay for your college fees without any issue.