Most people know that it’s a good idea to set some money aside for a rainy day, but a surprisingly large number wouldn’t know how to start. For others, saving money can be difficult if they’re living from paycheck to paycheck. For almost anyone who wants to save money, a savings bank account is a good place to start. It can be the beginning of larger things like buying a home, or investing in real estate or higher-yielding CDs.
Saving for a rainy day
It sounds like a good idea, but a surprisingly large number of people have never gotten around to getting started saving money. Others may find it difficult to save anything at all when they’re living paycheck to paycheck. Yet others may have had their savings wiped out due to emergencies like medical bills or job loss.
For whatever reason, a large proportion of Americans have limited or even zero savings. Almost a third, or 32%, of people between the ages of 53 and 62 have no savings at all, according to a study by Bankrate. That’s a higher proportion than any other age group, and particularly because this cohort is approaching retirement. For people at any stage of their lives, a traditional savings account can be a good way to begin saving money. It can be a stepping stone towards larger and more rewarding investments.
Pros and cons of a savings bank account
Traditional savings bank accounts are easy to open, and they pay interest. Deposits are also insured by FDIC up to a total of $250,000, making them a safe home for your money. You do have to maintain a certain minimum balance to avoid paying monthly fees. It may be possible to link your new savings account to an existing checking account, which will give you a combined balance sufficient to waive fees.
With all these pluses, savings bank accounts are an easy way to get started saving money. However, there are some limitations as well, such as a very low interest rate. CDs or fixed term deposits offer higher interest rates, though they are not insured. That could be the next step you take as an investor, moving some money into higher-yielding accounts. This would be a good way to save towards a goal like buying a home.
Online banking services
In many cases, it may be possible to open an account online, without needing to make a trip to the local branch. In fact, some banks specialize only in online banking. Mobil banking apps can handle all functions like mobile deposit and online bill pay.
Specialized tasks like getting mortgages and home loans can also be done online. Many online banks offer better rates for savings accounts, so it helps to shop around a little to find the best deals.
Savings bank accounts are the best way to get started saving for a rainy day. They offer a safe home for your money, and even pay interest. However, interest rates can be low, and it helps to shop around for the best rates. A savings bank account can also be a stepping stone to larger investments like high-yield CDs and buying a home.