You’ve always gotten along fine with just a checking account, so you may be wondering why open a savings account? There are actually several benefits to opening a savings account. If you’ve never seen the value before, consider these five benefits:
- It’s a safe place to store money A deposit account held in an FDIC-insured bank or credit union is one of the safest places to keep your money. Keeping the money in your home still leaves it vulnerable to theft. On the other hand, keeping all of your money in your checking account but trying to consider some of it “savings” may not be enough to resist spending it on more immediate needs.
- You can set and save for goals Once you’ve opened a deposit account, whether it’s a savings account, money market or certificate of deposit, you can then monitor your savings easily online. This will help you get an up-to-date picture of your finances and set savings goals. You might consider opening more than one savings account so that you can save separately for things like education or maybe an expensive purchase like a new computer or TV. Here again, opening a savings account gives you more options and more motivation to save then stashing it in an envelope or your wallet.
- You will earn interest
Interest is probably the best part of opening a savings account – letting your money earn money. And, depending on which deposit accounts you choose to open, you can earn varying amounts of interest. Generally, the highest interest rates are found in certificates of deposit, then money markets and finally savings accounts. (This is because the access to your funds is more restricted in that order as well.) Regardless, when you open a savings account, you also open the possibility of earning more money just for doing so.
- It will help your credit
Having a savings account that is well-stocked and growing can do good things for your credit score. Potential lenders like to see that you are responsible with your money and have some at your disposal beyond your checking account. Keeping your savings in cash won’t allow them to find it when they run your credit.
- You can access the funds when you need them
Finally, if you had hesitated in opening a savings account because it seemed restrictive, no need to worry. Savings accounts can be as liquid as you need them to be. A traditional savings account at the same bank as your checking account is easily accessed. You can transfer funds between the two accounts at will. And, with online banking so common now, you can do this just as easily between financial institutions.
So, if you’ve been on the fence about opening a deposit account, debate no longer. Open a savings account sooner rather than later to start seeing the benefits.
Sponsored content was created and provided by Citizens Financial Group.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.
[…] in, and it should be more than enough to make ends meet and even put away a little something in the savings account each month. So, why does it seem like you have to stretch every cent once you reach the final days […]