Whether you are opening a new Fixed Deposit in a bank or choosing one of the other top investment options, the benefits and disadvantages need to be understood to make the right choice. The same is also valid for a bank saving account. To grasp some of the most noticeable benefits, read this article to find out how it outweighs the Savings Account drawbacks.
When choosing an investment option, most individuals focus only on the incentives linked to it. However, it is essential to know the positive as well as the bad of the choice you choose to make an educated investment decision. Although there are many perks to the Savings Account Plan, there are also a few pitfalls that you should hear about before starting a new account. Some of the most significant benefits and drawbacks of the Savings Account are described below:
What are the Advantages of a savings account?
Earn interest income on deposits
A Savings Account allows you to gain returns on balance invested. Banks now deliver higher savings account interest rates and a variety of other incentives to lure potential clients, such as discounts on locker leases, unrestricted ATM transfers, and so on. Also, several different types of savings accounts are now provided by some banks to satisfy the varied needs of consumers.
Safest Option for Investment
One of the tremendous benefits of the Savings Account is that a Savings Account does not invest the funds, unlike most other investing strategies, but also provides moderate returns. To take advantage of this functionality, all you need to do is deposit money into your savings account.
The minimum volume of Investment
To keep receiving interest, you are merely expected to maintain the minimum balance in your savings account. For every bank, this minimum deposit amount can be different.
Quick access to your funds
The only alternative that keeps the money invested while still encouraging you to use the funds how and when you want is possibly a Savings Account. Without thinking about any levy or lock-in duration that is prevalent with most other forms of investing, you are allowed to deposit and withdraw funds. With the assistance of your bank’s Internet and mobile banking service, you can even transfer money online from your Savings Account to some other bank account.
With Exciting Features avail a Debit Card
To make it easy for bank customers to withdraw money from ATMs, a savings account comes with a debit card. To experience cashless shopping, you can swipe your Debit Card at offline stores and showrooms. However, aside from this ease, some banks often sell debit cards with a variety of thrilling advantages. The benefits make using a Debit Card more fun and rewarding, from online shopping coupons, luxury access to food delivery service, online Over-The-Top (OTT) media services channels, to ordering a cab service.
What are the disadvantages associated with it?
- Interest Rates Will Change: Banks have the right to make changes to the savings account interest rates. Such updates, however, are usually limited.
- Quick Access: Easy access to funds is both a positive and a downside. While this means that as appropriate, you can use your funds, it often tempts people to spend more.
- Minimum Balance Requirement: If the minimum balance needed by the bank is not kept, the banks will charge a penalty for the same.
Although there are still a few pitfalls, the positives of the Savings Account certainly outweigh the drawbacks. In comparison, by introducing a few strategies, such as opening an FD account alongside or opting for a zero balance account, much of the pitfalls can be overcome.