The Savings Account Basics

All earn and no save is surely an unhealthy exercise with respect to building your wealth. It is always advisable to have your money channelized in the right avenues of investment in order to yield better returns.

Savings is also a good for the rainy days to come. Every individual might not be that keen on making investments in the riskier options like mutual funds, stocks or shares. But in today’s time a savings account is a staple when it comes to wealth management.

Every bank comes up with a host of savings option however there are three basic accounts that every bank will provide you with, let us put light on those basic accounts you might put to use as per your preferences and requirements.

 Basic or Regular Account

The simplest of all accounts with respect usage and also the most common type available. This account can be opened with a nominal amount of money, sometimes also referred to as a “passbook account”. The best part about this account is that there is no hard and fast rule of some minimum amount to be maintained in the account. Also an easy access to your money is available with no real cost applied after a defined number of withdrawals. However if you are looking for high returns on your money you might have to check for some other options as this account doesn’t come with any high rate of interest.

Money Market Account

Unlike the regular account you can avail a higher rate of interest with a money market account however you are expected to maintain a higher minimum balance in the account, the amount differs from bank to bank. Also the rate of interest changes as per the change in the economic status of the market. The account will offer you an easy access to your money but the number of withdrawals shall however be limited. There is a provision to write checks but that facility also comes with a number limit.

Certificate of Deposit (CD)

This type of account is a little different than the other two mentioned above. In this account the depositor is expected to keep the money in the account for a defined time period, which varies from bank to bank and the type of certificate of deposit chosen. A penalty is likely to be incurred if the money channelized into a CD is removed before the occurrence of a maturity date. The interest rate provided in CD is often higher as compared to the other accounts and is usually fixed. Because of all these attributes a CD is considered to be a simple and a straightforward avenue to make investments.

With the basics of the various bank accounts on offer, choose the one that fits your bill well. Just having a bank account is alone not sufficient. But a clear perspective as to the need for the account and the benefits provided by it also play a vital role in choosing a bank to  provide that gives you the desired services.