Understanding Savings Accounts And Their Interest Rates

By Author: chalmela
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Savings Account are one of the simplest yet very popular financial products and significantly help individuals to keep their money safe and secure. Be it for an emergency, for a future purchase or if you wish to invest your money in a secure place with the aim of gaining some interest then the Savings Account is the best choice. Nonetheless, outside the practical use of such an account, it’s the Savings Account interest rate that does most of the work in terms of growth of your money.
What does the term Savings Account mean?
A Savings Account is a specific category of deposit account maintained by people in banks or other similar institutions. In this account, money is deposited for safekeeping, and interest is earned in the process. A current account is a type of account mainly used for transactions, while a Savings Account is meant for saving money.
This means that, for instance, it is always possible to add some cash to the account or, if you wish, to withdraw the sum whenever needed. However, there might ...
... be some limitations concerning the number of operations that can be made within a month without paying specific fees.
How does the interest rate work?
Savings Account interest rate can therefore be understood as share of your balance that the bank pays you for entrusting your money to them. Generally, the rate is an annual figure, but it is credited to the account monthly or quarterly as per the banking companies’ policies. Interest rates are very important because the higher the interest rate the more returns one is likely to earn from the deposit accounts.
Factors affecting the interest rate
Monetary bank policies affect the base rates followed by commercial banks. If base rates increase, better rates will likely be offered on financial institutions' saving products. Moreover, to gain maximum interest from deposits, larger balances or accounts to which customers are restricted to a limited number of withdrawals per month are usually paid a higher interest rate.
Maximizing your savings
This is especially important when you need to open a Savings Account since the interest rate differs from one bank to another. Although the numbers are not very large to look at when compiling pregnancy over a period of many years, even the minutest differences can make a massive difference in your financial capacity and portfolio. One should check any advertising offers or special accounts which provide increased rates depending on the balance value.
Conclusion
A Savings Account is a safe method whereby one can save the money he/she makes while still being able to access the money at any time. By this, the interest rate on the Savings Account can be used to keep your money productive even when it is idle in the banking institutions.