Savings Accounts

Overview

The savings account allows you not only to save money but also help you earn money in the form of interest on your savings. Most savings accounts require a minimum deposit, typically $100 USD. When you deposit money in a savings account, it is protected from varying rate cuts as the money is locked into a fixed rate account. Many banks also allow you have online savings accounts, making it easy to manage and transfer funds.

How It Works

This bank account is similar to a checking account in which you deposit funds. You are permitted to access this account only by visiting the bank's ATM, website, or its internal offices. Though you can access your funds quickly and easily, you cannot pay your bills with a savings account. Most savings accounts are created to earn interest. This interest may be at a rate of about one to four percent a year, depending on the financial institution. As the duration of your savings increases, you get more money as interest until you close the account. A few accounts under this category require you to maintain a constant minimum balance.

Benefits

Apart from using it for earning interest, you can also withdraw money from your savings account in case of emergency or to buy big ticket items you cannot afford it at the moment. Savings accounts also offer FDIC protection wherein your account (up to $100,000) will be certified by the government. So, even if your bank goes out of business, your money is guaranteed to come back to you. With the insecurity of the current financial market, this is a big reassurance to any account holder.

Savings accounts also help you to establish a credit history. The longer you have financial accounts, the more favorable this looks to potential lenders and credit card companies. Having savings accounts shows your ability to budget the available money and also reserve it for an unexpected expense.

Companies such as WTDirect offer Internet banking with free high-limit transfers and online statements, so it's beneficial to open a savings account with them.

Cost/Pricing

The main costs of savings account creation lay in the amount being charged. In addition to maintaining a certain balance, some banks may charge for additional withdrawals and transfers from your account. For example, if you have three standard withdrawals a month and you take out money the fourth time, you will be charged a fee. You also need to be aware that if you make more than $10 in interest per year, you can claim the amount on your income taxes.

Timing

It's good to start a savings account as early as possible. After all, the longer the account is in place, the more interest you will accrue. Some parents will create accounts for their children as cosigners on the account, giving the account responsibility over to the child when they turn 18.

Companies/Industries

Like checking accounts, there are numerous banking institutions available where you can open a savings account. Below is a list of some of the popular institutions that offer savings accounts, and online promotions:

• WTDirect - Offers Internet banking with free high-limit transfers and online statements.
• ING Direct - With The Orange Savings Account, you can earn high interest, find great rates, no fees and no minimums. Start saving in under five minutes.
• HSBC - Earn 1.35% APY* in Online Savings.