The reliability makes savings account a safe and suitable option for depositing cash for short-term needs. There are limitations on the frequency of withdrawing funds. Owing to its liquidity, it offers lesser interest rates than the more restrictive savings options and investments.
These accounts are ideal for creating an emergency fund with short-term goals like going on a vacation, buying a car, or simply saving the extra cash to earn some interest.
You need to know your savings account number as well as the bank code.
The bank routing number is one other such technical detail that you should know about because it is an important indicator of your bank. It is a collection of nine digits that is given to every bank by higher authorities so they can be distinguished from one another. The number is usually based on the geographic location of the bank where you first registered.
Savings and similar deposit accounts provide vital funds, which financial institutions, in turn, lend to other parties. This is why savings accounts are found in all kinds of banks, whether traditional or online.
The rate of interest which the bank provides on your savings account varies according to the market status. Until the bank promises a fixed rate for a certain period, interest rates can be lowered at any time. Any changes in the federal funds rate of the open market virtually affect the banks’ interest rates.
The money kept in your savings account is stored safely in the bank or the Credit Union. Money in the form of cash can easily be stolen or damaged outside of a bank. All banks are covered by the Federal Deposit Insurance Corporation, whereas all credit unions are covered by the National Credit Union Share Insurance Fund. Hence, the federal government insures your savings, which will prevent you from losing money if the bank fails.
It is more convenient to store money in savings accounts because you can withdraw or transfer the funds at your convenience. Withdrawals can be made from a savings account through ATMs, electronic fund transfers, debit cards, or cheques.
In any bank, opening a savings account involves only a few steps. It usually takes from a few minutes to less than an hour to complete the entire registration and account opening procedure. You can open an account online very quickly with the help of your mobile device or by visiting a bank branch in person if you need guidance.
The steps involved in opening a savings account are:
1. Study several banks and review their interest rate, minimum balance, yearly fees and other formalities and choose the best option that suits your needs.
2. In the case of credit unions, eligibility criteria need to be fulfilled before you can join. Account opening details can be looked up online, or a credit union can be called for details.
3. Choose a bank or credit union that suits you best. The bank must have an app that is user friendly and supports online transactions. The account should be easy to operate with minimum formalities.
4. The branch must be located in a place near you. Marginally high savings rates are not worth crucial consideration unless you deposit a bulk sum.
5. All legal documents, including government identification credentials and your social security number, are needed to open the account.
6. After finally finishing the application, you can open the account online or directly applying to the bank.
7. An initial deposit needs to be made to activate the account.
You must be at least 18 years old or older if you wish to open a savings account in any bank. In the case of a minor, several formalities enable anyone under 18 to save their money in a bank.
A savings account is a great option to keep your money saved for future needs. Even though the interest might not be much, you will not lose money if kept in a federally insured bank.
Some of the most common uses of a savings account are:
• Making a necessary purchase: If buying something costly like a house or a car, a down payment is required to qualify for a loan. A savings account can enable you to save for the down payment while preparing to make the purchase.
• Saving for vacation expenses: vacation can be best enjoyed when you do not have to worry about money. Save sufficient funds for a vacation in your savings account by transferring a certain amount every month.
• Emergency purposes: Life can take a surprising turn, and emergency funds can help you avoid any debt – while taking care of issues at hand quickly.