Savings Accounts & Interest Rates

When it comes to savings accounts you need to look around and decide what is best for you, because different banks will offer different sorts of deals.

To start with, you want to find a savings account that offers you the highest interest rate possible. This may vary by less than a percent between banks, however it all adds up so try and get the best rate possible.

It is also important to check for any fees that bank may charge you. For example, some banks may charge a maintenance fee for keeping your money with them, or impose a fee if your balance falls below a certain minimum amount.

In addition to this you may also be required to keep your account active, such as by depositing money into it every so often.

Variable Interest Rates

Some savings accounts will offer you a fixed interest rate, which means no matter how much money you have in your account you will always earn the same rate of interest (although this rate itself may rise and fall depending on your countries economy).

Other savings accounts will offer a tiered account system, whereby the more money you put into your account the more interest you will get.

This is designed to encourage people to save more, and can be quite rewarding with the right account.

Watch Out For Hidden Fees

However when it comes to interest rates, and this is something that applies to all types of accounts, things may not always be as attractive as they appear.

For example, if your account gives you high interest rates but imposes higher than average fees for the way you use that account, then you might get a better deal elsewhere with a slighter lower interest rate and lower fees.

So it’s always worth looking at the fee disclosure agreement to see what fees your bank charges, and how those fees will affect you for the way you want to use that account.

Government Insurance

Finally, before opening a savings account always ensure that your government provides you with some form of protection should that bank be forced to close.

Usually your government with insure you for a certain amount of money within that account, but anything over that limit you will not be insured for.

Also this insurance usually applies to banks that are within your own country, and not banks from abroad.

Overall a savings account can be a good place to keep your money if you can get a good interest rate. However if you are getting a low rate of interest, it may not seem like such an attractive option especially if you have a lot of money.

This is especially true in today’s global economy, which has see a sharp decrease in interest rates for savers. Although some banks will still try to offer you a reasonable rate of interest, to encourage you to save your money with them.

Now that you have idea of the two main types of accounts, let’s have a look at some of the different types of financial institutions which you can put your money into.

Commercial Banks

Commercial banks can range from the large big name banks, to the smaller local banks. However due to the state of the global economy, smaller banks are becoming fewer in number as are the number of banks in general as different banks are starting to merge with each other.

All commercial banks are regulated by the government, and are allowed to take deposits, loan money and provide other banking services.

They all operate on a fractional reserve principle, which allows them to lend out more money than they actually have.

If everyone who had a bank account were to try and withdraw all their money on the same day, the banks would not have enough money to repay everyone back. This is why banks impose a limit on how much you can withdraw per day.

Credit Unions

Credit unions are an alternative to commercial banks, and offer many of the same services such as savings accounts and debit cards. Usually they also offer better rates of interest on savings and loans.

Credit unions were initially created to help the poorer members of society, and in order to join one you have to be eligible to become a member which will vary depending on the union and the country you are in.

If you are eligible to join a credit union, you may find them to be a very good alternative to the larger commercial banks.

Withdrawing Your Money With Cash Machines / ATMs

Cash machines, or ATMs as they are called in some countries, are a convenient way to access your money when you’re out and about.

In general, your bank won’t charge you for using their own cash machine, although they may charge you for using a machine that is not their own.

If this applies to you, try and use the machines which you don’t have to pay a fee for otherwise you could end up paying quite a lot in fees over the course of a year.

Most machines will tell you if they are going to charge you a fee, so you should always have the option not to use it if you don’t want to pay the fee.

An alternative way to avoid paying fees is to get cash back when you use your card to pay for your shopping. However whether or not you can receive cash back, will depend on your card and the type of account you have.