A savings account is a monetary deposit maintained by a customer at a bank (or any other kind of financial institution), in return for interest. The purpose of a savings account are two-fold: one, to ensure that the depositor’s money is held in a secure place; and two, to make the money ‘earn’ during the term of the deposit as savings account interest. The money maintained in a savings account is also liquid, which means that the depositor can access in when he needs to.
While choosing a savings account, most people pay attention to the interest rates, and little else. While it is important for a person to ensure their money earns a competitive rate of interest, it is also essential that he does not neglect some other important details related to the opening of the account.
Types of Accounts
Today, a customer has many options in terms of the types of savings accounts available and the financial institutions offering them. All the high street banks, as well as the majority of building societies now offer their services online. The type of savings account chosen by an individual depends on their requirements and preferences.
Deposit and Account Fees
The majority of banks have a minimum deposit stipulation for customers who want to open a new savings account. While in most cases the deposit is nominal, it can be very large in others. Before opening an account, it is essential to check the exact amount of money that needs to be held in the account at any point in time, and what penalty will be levied if the deposit goes below the minimum amount. Banks also charge varying amounts as annual account fees, transaction fees (whether withdrawing from an ATM or making an online transfer), and these can add up over a period of time. It is most important to go through all the fine print so one does not have to pay heavy charges or fines at the end of the year.
Convenience can also be a major factor that influences a person’s choice of bank or type of savings…