07 Feb How Savings Accounts Work
There are numerous ways that one can make savings. You can choose to have home savings, save through banks, or save in investments. Whichever way you choose, the main aim is in keeping your money safe intact for future use. The method you use in making your savings usually dictates whether you will get an extra bonus in addition to the money you have put away for savings or not. Let’s focus on the making of savings through savings accounts.
The use of savings accounts means that you will approach a bank to open a savings account to keep your money. The bank will open for you a savings account where they will credit the money. This money will earn you interest which the bank will pay against your balance. The interest amount is usually calculated as a percentage of your savings in the account. The bank is usually liable to paying this interest amount at a particular rate on a regular schedule as agreed upon your opening of the account.
Banks usually pay interest to savings accounts and even to checking accounts to encourage people to keep making savings. As long as you make savings, you help to raise the banks deposits thus helping it to be able to lend the money to customers seeking loans. As the bank lends money, it earns in the form of the interest rates paid by the loan borrowers. You in turn get a percentage of these rewards as interest gained to your account regularly as long as you keep your savings. In as much as the bank trades using your money; you are usually at will to take it whenever you feel that you need it.
There are usually different types of savings accounts offered and these usually have different interest rates. The level of access you have to your money is what dictates the kind of interest rate you can earn and thus the type of savings account that you own. Usually, each account has its own set of rules which vary from minimum balance amount, penalty charges, and associated fees for maintaining the account. You may be limited in the withdrawals you can make and if you fail to adhere to these, you risk losing any interest that you may have earned. You will also find that you only have limited free withdrawals in a month and any beyond that will come at a cost.
It is good to listen and ask questions before opening a savings account so that you can clearly understand what your savings account is all about.