Everyone wants to keep their money safe and one of the best ways to ensure the security of the money is to maintain a savings account. All leading banks in the country provide an opportunity for the people to have the above-mentioned type of account. However, there are some pros and cons of having this account. Here you can find the reasons why you need to have a savings account and why not to. Advantages of maintaining a savings account Some advantages of having an account for savings are:
- The country provides insured savings accounts Most of the accounts for savings in the country are insured by NCUA and FDIC. These insurances ensure total security of the maximum savings money as per the law. The normal limit of money that is protected by law is $250,000 for a single depositor. The same limit is followed for insurance and ownership too.
- Yielding interests A savings account gives the opportunity to the holder to earn. However, the interest rate in the country is low. However, the owner of the account can yield interest over capital money. The interests are added on the capital generally on a monthly basis.
- Opportunity for opening an account with less money Many banks provide savings accounts to people with a minimum balance. You can open a savings account in the bank with only $25 in it. Some other banks in the country also give the customer a chance of opening an account with $1. Thus, you can save money with minute amounts while opening a savings account.
Disadvantages of maintaining a savings account Some disadvantages of having an account for savings are:
- Withdrawal limits are present Certain banks have withdrawal limits termed as ‘Regulation D’. Under this lawful regulation, one cannot withdraw more than six times from a savings account. The same happens for a money market account too. Thus, you might not get free access to your money even if it is present in your account. A fee for ‘excessive transaction’ might be imposed on the savings account on the 7th withdrawal. Same regulation is imposed on the transfers too.
- Account fees might be present There are certain fees for maintaining the account that most of the financial organizations might charge. You might, however, search for a fee-free variant of the account mentioned above. Expect to get the solutions from the credit unions and local banks in the country.
- Annual interests Many financial institutions provide annual interests for capital money. The chances of yield thus get restricted majorly. The investment opportunities also get minimized for an owner of such a savings account.
- Insurance limits are present The lower amount of insurance limit is a problem for the people. You can have an insurance savings account but it will be of no use if the amount of insurance is low. Thus, this is another disadvantage that you can face having a savings account.
Therefore, the above pros and cons should always be kept in mind while considering maintaining an account for savings.
