Types of savings accounts

Elaine King

Saving money is essential if you want to have healthy finances. The process is simple: just save a percentage of your income instead of spending it. Your savings can be used for many things, such as unanticipated events or to buy something that has a greater value than your everyday income (like a house or a car). Regardless of whether it's a simple activity or not, there are various types of savings accounts out there that offer different benefits according to how you want to use your money and the period of time in which you want to save it. Here's a brief explanation of some of the most important savings accounts. Remember that saving should be a process that involves the entire family and talking about the different types of accounts before selecting one can be an excellent educational activity for your entire family.

The accounts that are used to increase profitability
Almost everyone has heard about this type of account: these accounts offer a high interest rate. That rate is calculated based on the amount of money you keep in the account for a month. This type of account is designed for those who can deposit fixed sums throughout the month. Ideally, you shouldn't use this money, thus allowing it to increase. Due to the nature of these accounts, there may be charges when you exceed the number of allowed transactions during the month so, if you want to see your money grow, avoid withdrawing it from this account.

Accounts for your daily transactions
For those who receive various deposits and need money several times a month (i.e., if you're going to use this money for normal payments such as the rent or utilities), the best option for you is a transaction account. The interest rate is lower (sometimes zero), but you have the ease of withdrawing your money from ATMs or bank branches, as well as the benefit of using electronic banking.

Payroll accounts
These are the best type of accounts for receiving your salary. This account is similar to a transaction account and it has the advantage of not charging maintenance fees. Even if the interest rate isn't high, this type of account offers you benefits such as awards, bonds or loans.

Choose carefully, consider all of the options and benefits and select banks that have a proven track record. Remember that your savings are the foundation for many of your future plans and that protecting them is your responsibility.

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Elaine King - Family and Money Matters™ 2021