A savings account is the key to making profit. A savings account allows
you to keep a certain amount in the bank and earn interest over it.
Interest is what the bank pays you for keeping your money in their
possession. Saving accounts can be kept in banks or credit unions.
There are two benefits of keeping a savings account. The first is
that it is a safe means of saving. You can keep any sum of money in
a bank and it will be kept safe in a vault. The money is ensured by
the government so no matter what the circumstances, your money will
always be there.
The second advantage is that the bank pays you for keeping your
money with them. To get the maximum, you have to find a bank that
offers you a higher interest. You will also have to keep depositing
cash to earn yourself the maximum amount of interest. A good idea
is to have your profits come into your saving account from your
checking account.
The cost of opening an account may vary from bank to bank; some
may even offer opening your account for free. Banks may make some
general charges that they will debit from your account. One of these
charges is for not maintaining the required balance in your account.
You will have to find one that will offer you the account on a low
or no required balance.
Saving accounts have different functions under the savings category.
The three most common accounts are listed and explained below:
Basic Savings Account
In the Basic savings the requirements are very low with the required
balance typically from two to five hundred dollars. The interest
you earn is at a low rate. The advantage of this account is that
you can deposit your money as you like with very few rigid rules.
In some places this account may also be known as a Passbook account.
Certificate of Deposit (CD)
Certificate of Deposit account is maintained by you making a committed
amount of higher deposits. The sum of this could be anywhere from
a thousand to five thousand dollars. You will have to deposit your
money for a specific period of time. You will earn a fixed interest
over the sum. If you withdraw the money before the specified period
of time you will have to pay a penalty. The interest that you earn
from this account is much higher than the basic savings account.
Money Market Accounts
This kind of account holds the highest interest possible. The drawback
of this account is that you will have to make regular deposits which
could range from 500 dollars to two thousand dollars. The amount
that you can withdraw each month is also increased.
The best way to keep a track of your savings in the bank is to keep
a register with you to write down each deposit. You must keep track
of deposits and withdrawals, handle the math and add the interest
to get the final figure so that these can then be compared with
your banks statement. Your reconciled statements should tally with
each other after having made the adjustments.
