Benefits Of A Personal Savings Account
People use savings accounts to keep their money secure while it gains interest. If you're saving up for something but you're having trouble putting money aside, a savings account could help motivate you to save.
Here are six benefits to having a personal savings account:
1. Interest
Many savings accounts will allow you to earn annual interest. The amount will be based on a percentage of your funds (e.g., .05 percent). If you store a significant amount of money in your account, that interest can accumulate into a large sum of money. It's a great way to earn money without having to do anything.
2. A Separate Account
When you purchase something with your debit card, the money gets taken out of your checking account. The same is usually true when you get cash at an ATM. The money in your savings account is easier to forget about and, therefore, avoid spending.
Typically, you'll only take cash out of your savings account when you desperately need it or once you've saved up the amount you needed. It grows surprisingly quickly because you're not constantly taking money out of it.
3. No Fees
Most, but not all, savings accounts don't have any fees associated with them. That means it's completely free to keep your money in one while you collect interest. That's why putting money into a savings account is considered a responsible financial choice.
4. Short-term Saving
Are you trying to save up a large sum of money to pay for something in the next year or so? Whether it's a vacation, elective surgery, down-payment on a house, etc., you will be more likely to reach your goal if you use a savings account. Your savings will quickly accumulate if you start depositing even a little bit every time you get paid.
5. Long-term Saving
Are you trying to save for the future? Savings accounts are used by many wise investors and folks preparing for retirement. By depositing what you can each year and letting the interest build-up, you'll end up with a lovely addition to your retirement fund.
6. Automatic Deposit Options
Some banks have special features available for their savings accounts that encourage you to save. For example, some will let you choose to automatically take a percentage of your checking account deposits and put it into your savings account. These types of features help you save money without even trying.