The Importance of a Savings Account

by Justin Weinger on September 22, 2012

One of the wisest moves a person could ever make money wise is to open up a savings account.  True, the interest it yields will be nothing to shout about.  But if deposits are made into it on a regular basis without any withdrawals it can in the long run become a reliable safety cushion in the event of a financial emergency.  The savings account we are referring to here is the traditional type one would open in a bank, savings and loan or credit union.

However, there are a multitude of other savings accounts as well.  Far too numerous to go into in the space allotted here.  It only stands to reason that provided you keep a certain minimum balance in your savings account that you draw interest on it.  After all, the bank itself is making money off of it by using it for their own investments.  As previously mentioned, even though the interest is not all that great, there are ways that one can increase it.

The main method would be to open a certificate of deposit (CD).  These are also referred to outside of the U.S. as time deposits.  When you open a CD you are locking in the account for a certain amount of time, which could be anywhere from monthly all the way up to five years.  You are also guaranteed a fixed interest rate which you will receive when the time comes to withdraw your initial funds. 

Do be advised though that some banks also have CD’s with variable rates.  Should you decide to go this route, make sure your financial institution spells everything out for you in clear terms.  And another tip; the smaller sized banks almost always offer higher rates than the bigger ones.  Make sure that you become as well-versed as possible before opening this type or any other kind of savings account.  Hey, it’s your money; no one will look after it better than you.

As we stated at the outset, there are a number of different savings accounts.  Others are health savings accounts, money market accounts and so on.  Every individual should become knowledgeable in all financial matters as they may pertain to their particular situation.  Don’t rely on brokers, consultants and other “professionals” to do it for you. 

It’s an unfortunate fact that these folks are sometimes motivated more by commissions and service fees or other issues and not really as interested in your financial well-being as they should be.    

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