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The Benefits of Savings Accounts 

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Personal Finance
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By Liliana Kunze

April 06, 2022

It’s always a good idea to open a savings account whether you’re saving for a dream vacation, upgrading your car, or simply ensuring your financial security in case of an emergency.

Savings accounts are no different from your primary checking account in terms of security. The Federal Deposit Insurance Corporation (FDIC) and your bank will provide you with the appropriate guarantees to ensure that your money is secured.

Many people do not consider opening savings accounts because the returns are low compared to long-term, higher-risk investments. However, there are advantages to opening an account that outweighs the relatively low return. 

What are the main benefits of a savings account? 

Perhaps the main benefit savings accounts have to offer is interest. Interest rates will fluctuate, and it’s a good idea to check with your bank what they can offer you. To put it into perspective, a savings account with $1000 in it for 1 year, with an interest rate of 1%, would earn you $10 by the end of the year. 

If you open a savings account with the same provider as your primary checking account, this will enable you to have the facility of instant transfers from one account to another with no charges.

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A savings account doesn’t earn a lot of interest, but it is low risk, unlike many other investments. Long-term investors are generally willing to take on more risk and tie up cash for a certain period. With this type of investment, there is less flexibility and if you needed to withdraw the cash before the terms of the policy, you would be subject to an early withdrawal fee.

You have access to withdraw your funds at any time. There are no hidden costs or fees for withdrawing or transferring money across your accounts 

Your money is covered by the FDIC up to a value of $250,000, giving you peace of mind that your money is safe. 

A savings account doesn’t require a big initial investment, most accounts can be opened with a low balance, there is usually no minimum deposit to open and maintain an account. 

Once you have set up your account set yourself a savings goal, if you commit to saving a set amount every month it will soon add up.

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