There is virtually no financial advisor or personal economist out there that will not tell about how important it is for one to have a savings account. Personal savings are practically the only way one can afford a lifestyle while also having the peace of mind that when there is money needed that goes beyond the norm, he or she will be able use money that has been put away for such a time.
Savings accounts can come in many forms and are offered through your local banks and credit unions. Savings are crucial not only for when things go wrong, but for large purchases as well such as buying a car or house. Some of the types of savings offered by your banks and credit unions may come in the form of a simple savings account. These are relatively easy accounts to understand. One can deposit an amount of money into these simple savings accounts and can rest assured that it will do nothing but accrue interest.
The interest rates on personal savings accounts however, will be very low and at this point in time probably less than one percent per year. If one is looking for a better interest rate than that, then simple savings accounts are probably not the way to go. Also, when starting a savings account be sure you know what the penalties, if any, there are when withdrawing money out of your savings account. Some banks charge fees when one withdraws money from their savings account before a certain time. Other banks may allow up to so many withdrawals out of the savings accounts per month or per year before they charge one a penalty.
Although savings accounts do not gain the interest of other forms of savings, for the newcomer this may be the best option. With a simple savings account one does not have all the options that may go with other savings such as money market accounts, CD’s, and investment bonds. He or she can know that their money is safe in their savings account and not worry about the many investment markets other forms of savings may follow. Really, the only thing one should pay attention to when it comes to his or her savings account is the interest rate. As prior stated, interest rates are currently at all time lows in most of the banking sector.
The good thing about that is for the most part, you can only increase your interest rate from this point forward unless something drastic happens and the banks see another downward spiral as in 2009. Also, a good rule of thumb is to contribute to your savings with almost every paycheck. Remember that it was suggested to you to create a strategy for your savings? Stick to that strategy, even if it means only putting the minimum amount in your savings account. You will be surprised at how fast fifty or even twenty five dollars will grow when you deposit that on a weekly or bi weekly basis.
Red Wealth (redweathzone.co.uk) is a website for personal finance news. The goal is to provide general direction and information to its visitors concerning personal financial goals and freedoms.