10 Feb 3 Ways to Make Savings in Banks
Banks offer 3 main ways for an individual to make savings. These include:
- Regular savings accounts
- Certificates of Deposits (CDs)
- Money Market Accounts (MMAs)
The terms for these services may vary from one bank to another. Banks wants to be enticing to draw customers and will thus seek to set rules as governed by the finance board but also flex them a bit to make them appealing to their customers. Before setting a savings account with a bank, why not shop around and see what other banks have to offer. With that information, you will be in a better position to select the most beneficial bank for your needs.
Regular Savings Accounts
Regular savings accounts are usually very flexible. With one, you are at will to deposit or withdraw money at any time that you wish. This account usually rewards its owner with a small amount in interest and in most cases, on an annual basis. You as the owner also need to maintain a particular amount as a minimum balance in order to qualify for this interest.
Certificates of Deposits (CDs)
These usually pay a higher interest rate when compared to a regular savings account. if you are looking to get more earnings from your savings, then this is a valid option for you. It is good to keep in mind that Certificates of Deposits have a variety of terms which differ depending on the financial organization you choose to use. When you choose to save using Certificates of Deposit, you should be prepared to leave your money in the deposit state for a required or stated period of time. In case you have the need to make withdrawals of the money before the maturity period reaches, then you risk forfeiting all or part of the interest amount.
Money Markets Accounts (MMAs)
Though Money Markets Accounts have a higher interest rate; it is usually lower than that offered for Certificates of Deposit accounts. The rate is only higher than that offered on savings accounts. With this account, you are allowed to make up to a particular specified number of cheques or money transfers in a month. This is in an attempt to ensure that the minimum required balance is left in the account. in case the amount falls lower than the minimum balance, you risk incurring penalty fees or not gaining any interest rate for the month. This account may tier interest rates thus allowing you to earn different interest rates on your account balance in accordance with its variation.
When you want to make savings, you want to make sure that your money is protected. Using the three listed means of saving money ensures that your money is protected and secure. It not only offers protection but also additional earnings for you as the owner of the account/savings.
Even before you start to make savings, you need to have a goal in mind. Understanding why you are saving or what you are saving towards helps you have an investment strategy in place. Depending on the duration you need to have sufficient money to execute your plan, you will need to liquidate the savings to put them to play. This usually dictates the duration you will keep the money as savings in the account. There are both short and long term deposits. This makes it easy for you to get back your savings with interest whether you were saving for the next year’s vacation or for your retirement in the next decade. It is good to keep in mind that banks usually love a long term saving since it allows them to have high deposits that they can use for trading in order to earn more back as profits. Longer term savings also means bigger rewards for you.