Do you have Savings Accounts? If not then, Are you ready to yield interest on your savings?
We almost all have Credit Cards, Debit Cards and Checking Account. Many of us probably know that our money on checking account doesn’t yield any interest but we probably don’t know there is a way you can save money and yield interest. Let’s walk through Checking Accounts vs. Savings Accounts. What are the differences?
Almost all Banks and Credit Unions offer both Checking and Savings Accounts. They both might sound same but there are some similarities and differences. We all know, we need checking account for our daily banking purpose and for access to cash but does it worth keeping all your money on checking account? Unless you don’t care about % interest that you can yield from your money, you definitely need to have a savings account. Savings Accounts are good for long term storage and are designed for earning interest and allocating funds for future plans. (eg. Car, House, education, medical treatment, emergencies etc)
Now lets talk about similarities and differences between Checking Account and Savings Account.
- All most all Banks and Credit Unions offer both Checking and Savings Accounts.
- Both products are provided with government backed insurance of up to $250,000.
- Wire Transfer Fee (for incoming and/or outgoing wires)
- May have minimum balance requirement. (Many savings accounts don’t require)
- May require minimum deposit to open account. (Many savings accounts don’t require)
- May require monthly fee. (Many savings accounts don’t require)
Checking accounts are meant for daily banking and access to your cash. We need Checking account for depositing money, direct deposit from payroll, transferring money to or to receive money from, paying bills, mortgages or loan installments. Most checking accounts don’t offer you interest for your money and those who offer gives you very low % interest (Approx. 0.02%). Most banks require you to maintain minimum balance or to have direct deposit from your payroll. There might be some yearly maintenance fee. Several online transactions are possible with a checking account.
Savings Accounts are meant for long term saving and to have higher interest rates than checking accounts. Let’s say if are saving money for your marriage purpose or for buying cars/house, it is better to let large sums of sit in savings instead of checking. The market available offer for interest on savings accounts range from 0.1 – 1.15%. Many banks offer you no minimum deposit and no fee. Avoid overdraw the funds from your checking account by electing to use saving account for overdraft protection.
There are some restrictions on Savings Accounts.
- It allows you about 3-6 withdrawals a month. Some might allow you to withdraw only a portion of your total balance while there is no withdrawal restriction on your checking account.
- To use money, you will have to transfer it to your checking accounts. Some banks also offer you checks and ATM Cards.
- Many banks don’t offer online payments.
Always use checking account and savings account together as they work very well in combination. Split your fund between checking and saving and earn interest on your saving money. There are many banks which offer you 1% interest which means you will earn $100 a year for just keeping $10k on your savings account.
Which Bank is best for Saving Account? And what % of Interest does it offers?
We will try to bring you with different option on our next post.
Please feel free to provide us your feedback.