When building your personal financial plan, it is important to understand the different types of savings accounts in order to make an informed decision about where to save your money.
According to Business Today, savings accounts come with many little-known benefits to safeguard your earnings and set aside money for short-term spending goals.
This report explains different types of savings account.
Regular savings accounts
Similar to current accounts without the cheque-writing abilities, regular savings accounts are offered by nearly every bank for easy sign-up in person, over the phone, or even online. As a relatively easy option to establish and maintain, regular savings accounts are designed for creating a holding cell for worry-free finances.
Although the regular savings account usually requires a higher minimum balance requirement, most banks allow you to link it with your current account for easy transfer. A regular savings account, however, typically has low interest rates.
Money market account
As part of the financial market with very short maturities, a money market account is highly regarded for being a safe place to invest your earnings due to its high liquidity. There is virtually no risk involved in this investment.
While most money market deposit accounts will require you to hand over a higher minimum balance, the interest will be significantly higher than regular savings accounts. It is important to note that money market accounts do have a limit on how many withdrawals you can make monthly.
Automatic savings plan
For people who have a tendency to spend rather than save, an automatic savings plan can be the perfect option for developing a more healthy habit for saving money.
Offered at many banks to help customers gain lower banking fees, an automatic savings plan will automatically transfer money from your current account into your savings account monthly for a specific amount that you choose.
While you may find it disconcerting to watch money leave your current account each month, most individuals with automatic savings plans enjoy watching their savings account grow monthly with interest.
