For an average income person, saving money can be the most difficult thing of all. In this advanced and modern age, we could barely make the money to fulfill our essential needs, so thinking about saving a chunk from within them is not a cup of tea.
And even if we can manage to put aside a part of the money for a vacation or any other purpose, we can’t stash it under our beds, because then it wouldn’t be enough. So, the best way to save money is to stock it in the saving accounts. Saving accounts have been in use for years. They not only save our money but also increase it, so they are by far the best mean of saving the cash.
But as we all know that everything doesn’t come up with 100% perfection. Similarly, saving accounts also carries some drawbacks along with numerous benefits. Today, we’re gonna put light on both aspects of saving accounts, so stick with us till the end to know what’s in there for you in saving accounts.
Advantages of Savings Accounts
Saving accounts are safe and secure
Along with saving your money, savings accounts also ensures that it is protected and secure. If you have opened your savings account in a bank that holds the membership of FDIC (Federal Deposit Insurance Corporation), then it will provide you with up to 250,000$ for the insurance of your money.
They’re easy to open
Unlike opening a regular account, saving accounts are much easy and convenient to open, you don’t have to fulfill numerous formalities to create a savings account. It will barely take a few minutes to create an account. You can apply for the savings account over the phone, online, or by visiting the bank in person. Your account will be approved and ready to go just after a few minutes after applying.
They allow easy access to the money
Savings accounts allow you fast and easy access to your money so that you don’t have to wait for long in case of an emergency. You can handle, manage, and access your money online if your bank has an online website. All you need is an unlimited internet connection, if you have one, then you can access your account 24/7.
Low start-up rates
Saving accounts doesn’t require you much money for their star-up. You can even start your savings account with as little as $25. So you don’t have to worry if you don’t have hundreds of dollars in your pocket, you can still save with as much as you’ve got.
Easy billing methods
Saving accounts are beneficial for you to pay your bills and payments on time without delaying as they offer automated payment methods directly from savings without the need for any withdrawals.
Facilitates in switching accounts
Saving accounts does not lock you in for any time period which makes it easier for you to switch between multiple accounts whenever you like.
Disadvantages of Savings Accounts
Monthly maintenance fees
Some savings accounts require a minimum balance in the account while most of them also charge a monthly fee for the maintenance of your account. That’s why your account shouldn’t fall below the minimum balance or otherwise, the bank with start to subtract the debt from your savings.
Interests rates are low
The interest rates in saving accounts are really low, which means you can’t earn enough from the interest. However, the main purpose of a saving account is to save money not to increase it, so low-interest rates should not bother you much.
Variable rates
The rates of interest in savings accounts are not constant, they can change without any early notification, so you shouldn’t depend upon your interest as there is no guarantee of them, they can get high and low whenever the management want.
Inflation
If the saving accounts are not paying you the competitive interest rates, then there is an increased possibility that the interest amount that you have earned might get eaten up by inflation thus leaving you with a worthless account.
Limited transactions
Though you are allowed to access your savings account whenever you want, you are restricted to a limited number when it comes to transactions, you can only withdraw 6 transactions per month from a saving account due to Regulation D.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
Marry walker says
I was thinking to open my new saving account and was searching about best saving account and i got your blog. I read this blog and now i can understand that we all should know about advantages and disadvantages of saving account. I got some new information from your blog. Thanks for sharing. such a great information!