What is a savings account?
The savings account usually refers to an account in which a person places money to get a small amount of interest. Unlike 401K or IRA, resources are usually easily available, although some banks charge for paying money in time. In most cases, people can withdraw money at any time, at least whenever the bank is open or a bank ATM is available.
The term 'bank' is used here in general, because companies of credit and financing the money market can offer customers' accounts to customers. In addition to depositing earnings, the account also provides a safe place for people to give their money, and it's much better than storage in a mattress or cookie container.
In the US, if the bank declares bankruptcy, the aim of embezzlement or incorrectly manages its funds, the federal company insurance (FDIC) provides all accounts of up to $ 100,000 (USD). In fact, people who are bank in the United States should always look for an account is insured by FDIC. MostBank, credit union and funds of the money market offer this protection.
Consumers also have to shop on a savings account that offers the best interest rates. In the past, banks have often offered a slightly higher interest rate than credit unions. This is because credit unions are trying to provide lower interest rates than bank rates to their customers who borrow money. Now the credit unions are often quite competitive. Money market funds tend to be the most variable rate, as interest obtained will depend on the stock market.
When a person gives money to a savings account, he actually lends his money to a financial institution. In return for this loan, the bank offers the holder of the account part of the interest rate it charges to customers. As a result, the bank and the account holder will make a profit.
Sometimes people can keep their money on your check -up accountInterest, but if they are actually planning money for several months, it makes sense to use a savings account instead. Interest check accounts usually pay much less interest and usually require a relatively high minimum balance, about $ 1,000. If this balance is not maintained, the check account may actually charge the holder of the account fee for using an account to cancel any potential interest.
Most savings accounts require a minimum deposit, usually $ 100. Most financial institutions create an exception to accounts open to children who often have one as their first bank account. Banks are very helpful for children because it is a way to build their future customer base. Children can usually open an account with about $ 5.