Savings Accounts

Let us begin with the account that most of us will start out with, a savings account. The most traditional of savings accounts would have to be the old school passbook savings account. You would make a small deposit into the bank and they would in turn provide you with a register that was called a passbook. Each time after that when you made a deposit or withdrawal from your savings account, the bank teller would stamp it with the date and mark your passbook with the transaction details. There are also interest bearing savings accounts that will pay you minimal interest rates for the money you keep in your account. These types of savings account give you an opportunity to save money while still allowing you access to your funds. Just keep in mind that you interest will be paid on what is actually in your account on the day they calculate it. So if you had $5000.00 in your savings and withdrew $4500.00 the day before the interest was calculated, you go interest on $500.00, and not $5000.00. Some other things to look out for when you are choosing between savings accounts are restrictions like minimum balances. Some banking institutions require a minimal amount of money to remain in your savings account at all times. In some cases they simply need a balance to remain to keep the account open, or in other cases remaining above the minimum balance will keep you from incurring monthly service fees.

Some also have a limited number of transactions that you are allowed to make per month, so keep in mind how many times per month you will make deposits or withdrawals before you choose an account with these restrictions. You can also find online bank accounts in which all of the your savings account deposits you would have to do either electronically using direct deposits or by mailing checks to the bank and withdrawals either by electronic payment requests that would be done through mail. In some cases you may get a debit card that you can use at Automatic Teller Machines wherever they accept cards with the symbol from your bank account, but once again be aware of limits on the number of transactions you intend to use per month. With the banking industry as competitive as it is right now, most times you can find a savings account with no fees for numerous transactions and no minimum balance required. Another feature of the savings account is that you can, at most banking institutions, link your savings account to your checking account. This acts as a safety net for your checking account allowing the bank to remove money from your savings to cover any potential overdrafts to your checking account. Even if the accounts are not linked, having your savings at the same banking institution as other bank accounts that you may have allows for instant transfers of your funds between your accounts if necessary. In many places you can split up any automatic deposits that you have going into the bank and have them deposited into several accounts. For example, your paycheck may go into your checking account via direct deposit and you can set it up to take a percentage of your paycheck or just a set amount and have it go into your savings automatically. These days your bank accounts offer many programs to help their customers save money in easier more effortless ways than ever before. Savings accounts are also a terrific way to prepare your children for their financial future. It is important that they understand while they feel indestructible that they will not always be, and the younger you are when you begin to save for your financial future, the less effort it will take for you to save what you need because you will have the time that you need to allow the bank accounts and compounding interest do the work for you.