Bank savings accounts are a critical part of everybody's financial picture. If you need a safe place to keep money, a bank savings account is often a good choice. Here’s a quick review of what savings accounts are and why you might want to have a bank savings account.
What is a Bank Savings Account
A bank savings account is a type of account designed to simply hold money that you do not need immediate access to. When contrasted with checking accounts, bank savings accounts tend to pay a slightly higher rate.
Easy Access to a Bank Savings Account
Savings accounts offer easy access to your cash. In other words, your money is liquid (meaning you can make a withdrawal easily and quickly) in a bank savings account. Note that savings accounts are not as liquid as checking accounts, because you can get money from a checking account by simply writing a check.
Bank Savings Accounts Grow Your Money
When you have money in a bank savings account, your money earns interest.
This is a nice feature. Your bank savings account pays a rate of return on all the money in the account (your APY). That means that you get "paid" for keeping your money in the account. If you were not going to use the money anyway, then getting paid a little is better than nothing.
Bank savings accounts pay you more on your money than checking accounts.
Bank Savings Accounts are Relatively Safe
Bank savings accounts offer a safe place to keep your money. Suppose that you have $1,000 and you're not going to use the money for another 3 months. You could do several things with the money. You could carry it around with you, you could put it under your mattress, or you could put it into a bank savings account.
The safest thing to do with your money is to put it into a savings account. If you carry the money around with you, you might lose it. If the money is under your mattress, your house could burn down or be robbed. However, if the money is in a bank savings account, your banking institution is responsible for the safekeeping of that money. If the bank burns down, your money won't go with it, and any reputable bank will not just lose your savings.
Furthermore, you earn interest on the money in a savings account. You don't earn interest on cash that is sitting under your mattress.
Imagine the consequences if you didn’t use a bank savings account. You could miss your mortgage payment, for example, or you could wind up having to work when you’re unable to work.
Finding the Best Bank Savings Accounts
It literally pays to do some research on bank savings accounts. You’ll want to minimize fees and maximize your return.