Why to Open a Savings Account

Having a checking account in today’s world is just about a necessity.  Living in this world of online pay, and checks for just about everything else, savings accounts often take a back seat.  While the checking account can, and, in most cases, should remain the primary banking account for most individuals, having a separate savings account is also a good idea, and for several good reasons.

#1:  Savings accounts earn interest.  This can vary greatly from bank to bank, so it is important to do some homework before selecting a savings account.  Some checking accounts also offer interest, but this is typically very low, and always lower than what a bank would offer in a savings account.  Interest rates are not what they were in the 80s, but this can still lead to increased profit from money that might otherwise be sitting around and not earning anything.

#2:  Savings accounts are easy.  Opening a savings account can often be done online.  For those that prefer to do things in person, opening an account should not take much more than fifteen minutes.  Once established, depositing money can be as easy as transferring money from a checking account, which is something that can be done online in thirty seconds.

#3:  Savings accounts are safe.  Major steps are taken to protect all banking accounts, but the fact of the matter is, sometimes PIN numbers are stolen, checking numbers are discovered, debit cards are overcharged.  In short, things happen.  Not so with a savings account.  While not foolproof, it is significantly less likely that something will go wrong with a savings account when compared to a checking account.

#4:  Savings accounts protect spenders from themselves.  Small things can remind frivolous spenders just how real money is.  Rather than looking at a checking account and seeing thousands of dollars, that money can sit in a savings account.  Savings account money reminds the owners of the account that it “should not be touched.”

#5:  Savings accounts can lead to CDs.  Once a savings account has been established, one might decide that this money does not need to be touched for a longer period of time, and therefore can transfer some or all into a Certificate of Deposit (a CD).  These offer an even higher interest rate, and are the safest investments one can make.