If you plan on putting your money aside for particular goals, future needs, emergency fund, or just earn more interest, a personal savings account can be a great solution.
This article will discover more about personal savings accounts and some related information.
What is a personal savings account?
A personal savings account is just an account for each individual to put money in there for their needs and earn interest.
In other words, a personal savings account is an interest-holding deposit account that is kept funds at a bank or other financial institutions.
Basically, this type of account pays a fairly low interest rate. Their safety and reliability make them a perfect option for cash accumulation ready for your needs.
Although personal savings accounts have some limits on withdrawal flexibility, they’re ideal for raising an emergency fund, putting aside money for short-term goals/needs (buy a car/house or go on vacation, or sweep the money you don’t use in your checking account for earning more interest.)
Personal savings account advantages and disadvantages
Personal savings accounts give you a safe place to keep your money separate from your daily needs, allowing you to stash money for a rainy day to reach your savings goal.
The Basics of Personal Savings Accounts: What You Need to Know
Along with bank protection, your money will be kept safer than if it will be in your pocket or in your drawer.
Personal savings accounts also help you to earn interest. If you have any unneeded funds, put them in your savings account instead of accumulating funds in your checking account.
Holding the best checking and saving accounts at the same financial institution gives a lot of efficiency and convenience benefits. The transfers between 2 accounts are done instantaneously. The withdrawals or deposits to your savings account from your checking account will take effect instantly.
Many financial institutions permit you to open more than one savings account, which can be convenient if you want to track your savings progress.
While the savings account’s liquidity is one of its main benefits, it can also be a disadvantage, because the fund availability can engage you to spend what you saved. It’s more challenging to withdraw cash in a bond, withdraw funds from a retirement account than to draw money from your savings account linked to your checking account.
How to open a personal savings account
You can open a savings account with a minimum deposit. You can do it with an online bank or in person. If you’re prepared to open a personal savings account, follow some suggested steps.
When filling in a savings account form, it’s required to supply the bank some basic information as follows:
Your name, date of birth, address, phone number, email address SSN (Social Security number). This is because the account earns taxable interest.
If you open a savings account online, you will also provide the routing number and bank account number for the account you’re using to make your first deposit.
The bank will verify your savings account by making 2 small test deposits to verify. Basically, opening a savings account online is quick and convenient.
Some institutions will request you to make an initial deposit to open the account. Others can require you to open the account first and fund later.
You can open a personal savings account by visiting a bank branch nearby with your government-issued ID and any cash or checks to deposit. Your address, contact information, and SSN or taxpayer identification number can be requested to provide.
How to increase your earnings from a savings account
Although most banks offer low interest rates on their savings accounts, many banks and credit unions provide higher returns.
In particular, some online banks often offer a higher savings account rate. Because they don’t have physical branches, they spend less on total expenses and can often offer higher, more reasonable deposit rates.
The important thing is to shop around, find a bank with your checking account. Even if that financial institution doesn’t offer a good savings account rate, it will give you a reference to how much you can earn by moving your savings to another institution.
When you look for the best rates with a savings account, beware of account features that can curtail your earnings, or drain them. Some promotion savings accounts only offer the attractive rate for a short-term time.
Others will cap the balance which can earn the promotional rate. Sometimes, it can be deducted from your interest that you earn each month in your savings accounts.
More about DNBC Financial Group
DNBC Financial Group is a financial institution in the Fintech industry, supplying online payment solutions all around the world, especially for online accounts for business and personal needs. You can open an online business account for free.