The Perks of a Standard Savings Account
When you were little, you would keep the money you saved up in a piggy bank. You’d stuff the porcelain vessel with paper bills and coins that you collected from birthday cards, holiday gifts and allowances. You’d keep filling your piggy bank until you finally decided to smash it open and access all of that spending money.
Now, you have a much better location to store your savings: a standard savings account. A savings account comes with plenty of perks that you will want to take advantage of.
What are those perks?
A standard savings account comes with a small interest rate, which will incite your savings to grow over time. The more that you contribute to your collection of savings, the more interest you will accumulate.
If you want to speed up the growth of your savings, you can open up a high-yield savings account. A high-yield savings account has a higher interest rate than a standard savings account, which results in a higher annual percentage yield (APY).
The funds sitting in a standard savings account are easily accessible. You are free to make a withdrawal or transfer immediately. You don’t have to wait to access those funds or gain approval from your bank.
A standard savings account will have a limited number of withdrawals and transfers per month, which should discourage you from making unnecessary withdrawals. You’ll only feel obligated to access your funds when you really need them.
Savings accounts are low-risk investments. Why is that? As long as your savings account is with a bank that is insured by the Federal Deposit Insurance Corporation (FDIC), your savings are covered in the case that the bank fails. Those funds can be transferred into a savings account through a different bank. So, you’ll always have a safety net to rely on.
What Should You Use a Standard Savings Account for?
An Emergency Fund
A standard savings account is the perfect place to start building an emergency fund. An emergency fund is an essential financial tool that will allow you to recover from unexpected, urgent expenses in a short amount of time. With the help of your savings account, you can make a withdrawal or transfer to cover an emergency expense immediately.
Without an emergency fund, you might not be able to manage an urgent expense without disrupting your monthly budget. In that case, you may need to look into an online loan as an alternative payment method. With an approved online loan, you could use borrowed funds to pay off the expense quickly. You can learn more at CreditFresh about the alternative payment options available to you. They could come in handy when you don’t have emergency savings.
A Vacation Fund
Do you want to go on a trip in the near future? A standard savings account is the ideal spot to collect your savings. As long as you make regular contributions and avoid unnecessary withdrawals, you should have enough to cover travel essentials like plane tickets, hotel accommodations and insurance.
A Home Improvement Fund
You may not want to make improvements to your house now, but you might in the future. Put away funds for your home improvement projects in a standard savings fund. When you finally decide to revamp the kitchen or refresh your bathroom, you can dip into this account.
What Shouldn’t You Use a Standard Savings Account for?
Other types of savings should be reserved for other types of specialized investment funds, not for your standard savings account. These are some basic examples of savings that belong in other accounts:
- Retirement savings should be put in a 401(k) or individual retirement account (IRA)
- College savings should be put in a 529 plan
- Healthcare savings should be put in a health savings account (HSA)
A standard savings account offers anything but standard perks. So, open an account and start saving!