What Is Saving Account? Definition Of Saving Account.

A saving account is the basic type of account which can be created and maintained at any bank or credit union for saving the money. The basic purpose of saving account is to deposit the saved money at banks, keep them save, and use them during emergency. Saving accounts pay low rate of interest on deposited money which is beneficial for the users as it allow money to grow while keeping them safe. This money can be withdrawn anytime as per the user’s need. Saving accounts are also beneficial for financial institutions as they provide low-cost fund to banks and allows them to invest in profitable sectors. The saving accounts can be opened and maintained by any group including children, youngsters, retirees, and senior citizens.

What is Saving Account Saving Account Definition. Saving Account

Saving account plays a major role in developing and promoting saving habits in individuals. Instead of carrying money everywhere or keeping them at home, saving account is the safest place for money. Saving accounts are also easy to access and one can deposit and withdraw the cash whenever they want. For easing this process banks and credit unions offers services like debit card, credit card and electronic fund transfer and internet banking to its users. Some banks also charge fees for not maintaining the average monthly balance in the account.

How is saving account operated?

  • Saving accounts can be opened by depositing the required amount in banks or credit unions. After this, one will have to maintain the minimum required amount in their account. The saving accounts usually offer some rate of interest in the savings which is beneficial for the account holder.
  • Saving account can be opened and maintained by all age groups and one can open their account online or by visiting the bank personally.
  • Customer’s identification and social security number and tax identification number are essential for opening the saving account.
  • The limit of withdrawal and deposit varies from bank to bank because every financial institution offers different product and services. Usually banks do not have deposit limit but they have maintained some criteria and limit for money withdrawal.
  • For withdrawing the money one can visit nearest automated teller machine (ATM), transfer the money with the help of internet, or can visit nearest bank branch.
  • Financial institutions offer services like debit card, credit card and electronic fund transfer to account holders for easing the process of money withdrawal or money transfer.
  • Saving accounts does not have any maturity period and that’s why one can save for as long as he or she wants.
  • In financial institutions a certain amount of deposit in saving account is also secured by deposit insurance for making it more safe and secure to the customers.
  • Other services offered by financial institutions for customer’s ease and security includes SMS banking, internet baking, locker services, electronic fund transfer, mobile banking, automated teller machine and etc.

Advantages and disadvantages of saving accounts

Banks and some financial institutions pay modest interest to saving accounts which is beneficial for customers. Apart from facilitating the fund they are also very easy to access and you can deposit and withdraw the money whenever you want.

The liquidity of saving accounts makes them available too easily and it can tempt you to spend them. Apart from this saving accounts also pay lower rate of interest than Treasury bills and certificates of deposits (CDs).

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