Saving money is one of the most important life decisions that helps us plan our lives with peace of mind. One of the most common instruments that helps us in doing so is bank savings accounts, thus making it necessary to know how to open a bank account.
Now comes the question of choosing the type of savings account that fits your requirements. That is why it becomes important to know about the features and advantages of various savings accounts offered by banks.
1. Basic Savings Account
A basic savings account, the common choice in many banks, usually has a low minimum balance needed to open and maintain it. These accounts give small interest rates but offer easy access to funds on a daily basis. A basic savings account is appropriate for people who want their savings process to be simple and easy to access.
2. High-Yield Savings Account
They give more interest compared to simple savings accounts. These are good for people who wish to save and earn more from their deposits. Although these accounts might need a greater minimum balance for opening and maintenance, they provide better rates of interest, which can assist in increasing your savings quicker as time goes by.
3. Certificate of Deposit
A CD is an account where you can save your money for a fixed period with a set interest rate. Normally, CDs give better interest rates compared to typical savings accounts, but they need you to keep your funds locked away for some time – this could be anywhere from several months up to many years. If you have future-oriented financial goals and don’t require quick access to your money, CDs are appropriate because they allow people to get a guaranteed return on their investment.
4. Money Market Account
Money market accounts mix the traits of savings and checking accounts. They often have better interest rates than basic savings accounts and give you access to ATMs, too. Usually, money market accounts may ask for a bigger minimum balance to open and maintain the account, but they provide more flexibility and quick access compared to CDs.
Now that we have had a detailed look at the types of savings account, it is time to know how you can decide which one suits your needs the best.
Compare Interest Rates and Fees
Look at the interest rates, the minimum balance needed and fees related to various savings accounts.
Research Financial Institutions
Do thorough research on various banks and credit unions. Look into their reputation and customer service, as well as what range of products and services they offer.
After you have chosen the type of savings account you want, proceed with the bank’s steps to open new bank account. Generally, this process includes filling in an application form, giving identification papers and making a deposit. Choosing the correct savings account is a crucial step towards reaching your financial targets.
