One of the most important aspects of any personal finance plan is a plan for saving money for future expenditures or as emergency savings. To do this, you will need a savings bank account. This overview will tell you everything you need to know about savings bank accounts and their role in personal finance.
The Top Line
- It's important to include saving in your everyday financial plan so that you can make both planned and unexpected purchases.
- One of the best tools to use if you want to save money is a savings bank account.
- Savings bank accounts are accounts that you can use to save money and ensure it doesn't get spent on unintended purchases.
- There are thousands of banks that offer savings bank accounts.
- Though savings accounts of the past did not offer high-interest rates, new high-interest savings accounts are able to offer competitive interest rates.
What Are the Advantages of a Savings Account?
One of the reasons that savings accounts are used so commonly by people around the world is that there are plenty of advantages. Here are just some of the benefits that you can enjoy when you open a savings account.
The first benefit that you will gain access to when you open a bank savings account is that you will earn interest on the funds that you deposit. In the past, the interest rate was negligible in these accounts, ranging from .01% to .025% at the most aggressive institutions. However, there are now high-interest savings accounts that offer well over .5%. Rates vary by institution and over time.
Build an Emergency Fund
Another aspect of a bank savings account that you'll be able to enjoy is that you will have a much easier time building an emergency fund. Anyone that wants to practice responsible personal finance will have an emergency fund that will cover three to six months of expenses. Savings accounts make it easy to build up a fund for emergencies.
When you open a savings account, especially an online savings account, you will be able to access the funds that you put into the account at any time easily. This is a valuable thing to have in an account, since you may need the funds at the drop of a hat. Having a savings account with an online bank could even provide you with access to a debit card that draws directly from your savings account.
Less Likely to Spend
Finally, funds that are kept in a savings account are far less likely to be spent. If you have had trouble in the past with saving money and resisting the temptation to spend, then you should make it a priority to open a bank savings account.
What Are High-Yield Savings Accounts?
If you are planning on opening a savings account, you should consider opening a high-interest savings account. High-interest savings accounts are accounts that are designed to offer much more interest than traditional savings accounts. They are able to do this because many times, they are based online and do not have the expenses that come along with a traditional bank. Some require a higher balance to enjoy the higher interest rates.