The trend of savings account is increasing like a wildfire among people because of the exemplary benefits they offer. However, having an eye on the good and bad sides is important.
Bank accounts are nowadays a common subject, these are not only limited to the extent of businesses and organizations only, but in fact, people being individuals also get themselves a bank account. Previously, having a bank account was a luxury but now it is something even teenagers have. Well, there are several different accounts to open with a bank, each serves a different purpose.
What Is a Savings Account?
The savings account is a kind of bank account where an account holder keeps money in order to earn interest. The savings account interest rates are good as compared to other kinds of bank accounts and there are several saving account options given to the holder each having its own pros for the holders. These pros and cons help to make a decision as to whether people must have a savings account or not.
Many banks offer an opportunity to their holders to have a savings account with them; also, it has led to many online banking systems evolve that only maintain savings accounts for their clients. Using such an opportunity from a young age also allows teenagers to make the most of their savings and also helps to develop a saving habit in them from a young age.
How Is Savings Account Beneficial? (i)
When it comes to assessing the benefits of the savings accounts, you can have an eye on the below suggested options that make this account worth opening for.
- The very first benefit of having a savings account in place is the fact that your money grows rather than staying where it is. By keeping your money at home, you would not have it multiplied even in the form of a single penny. Hence, with a savings account no matter it is the amount it will move towards growth.
- Your funds are safe when kept in a savings account; you need not to worry about any theft at all. Moreover, when at home the money may compel people to spend it on useless stuff that is not the case when you have already kept your savings in a savings account.
- You are free to get your money withdrawn with no penalties. There are other options for savings as well like saving certificates but those options only cause you a hassle when withdrawn in the form of a penalty. Therefore, even during an emergency, you are bound to not use them unless their maturity period has arrived.
- Savings accounts come up with several options like no fee savings accounts that allow the users to enjoy a fee waiver that may be possible by maintaining a certain given balance at all times, which is good to save on the account maintenance cost.
- Your habit of saving money is developed in a consistent manner, by keeping money at home people are not able to save, but this way having a savings account you would be motivated to save a fixed amount of money every month that you will be required to deposit in your account.
- It is very easy to open and have an eye on, you can always keep a check on it by using the online account offered by the bank, and you can witness your withdrawals, your deposits, and the earning you have on the account.
- Although if people are not earning and have some extra cash available, it may be invested in the savings account and may generate a means of earning for them.
Downsides of a Savings Account (ii)
It is always suggested to have a look at the positive as well as the negative sides of everything before you jump into it, same goes for the savings account and here we have shared the downsides of having a savings account.
- When compared to other kinds of earning opportunities, a savings account may be a very slow earning option. There are other high risk and return options too which allow earning more quickly and that took a very huge sum of money.
- When it comes to tax, you cannot find yourself to be on the side of savings, you deposit the amount in a savings account over which you have already paid your share of tax, and similarly, when it comes to earning the interest, you have to pay tax on that too.
- Certain banks offer a compulsion to maintain a certain amount balance so that an account holder may earn interest on it, so abiding by those conditions amounts to be something very important in all aspects.
- Most of the savings accounts come up with a payment of a certain fee that is their service fee and is required to be deducted from your savings.
- The interest rates keep on fluctuating, sometimes high and sometimes low so your earning potential also tends to change.
- Savings accounts may be accessed through debit cards and ATM cards, so they might tempt you to spend whenever you need as they provide easy access to cash.
- Certain savings accounts are provided with the withdrawal limit, which means you cannot withdraw more than a limited amount and in case of emergency when you need immediate cash these accounts may somehow become an obstacle on your way.
- Many saving accounts these days do not offer you with a physical bank location that means their system works online and needs to be managed through the internet and this could be a risky matter because you cannot visit the bank for your own surety.
These days a lot of people opt to get a savings account in place, this allows them to keep their money safe and secure and also it features a growth that is going to benefit in the longer run. However, one must analyze all the pros and cons before they finally get themselves one so that they are mentally prepared with everything that is going to come on their way.
- https://www.quicken.com/pros-and-cons-traditional-savings-accounts
- https://www.ratecity.com.au/savings-accounts/articles/pros-cons-savings-account