Everybody knows the importance of savings, yet they ignore it. Life is so unpredictable, so one should always save for unexpected emergencies or other life events. Here’s an article on savings and checking accounts – pros and cons will make you want to save your hard-earned money.
Savings Account
- Pros
Access and availability
Saving accounts are hassle-free and easy to open. You can withdraw or deposit the money at ATMs and through online access whenever you wish to, but only in federal limits.
Protection
If your bank is a member of Federal Deposit Insurance Corporation, an amount of up to $250,000 is insured.
Liquid assets
Saving accounts deals in liquid assets (cash), so you don’t have to worry if you want to sell your investments or move your money.
Accrued interest
Although interest rates are not too high, you still get interest on your savings if you have a saving account. Every bank has different interest rates, so check it before you open the account.
- Cons
Minimum balance requirements
Savings accounts have to maintain a minimum balance or have monthly maintenance fees. If you are not able to main the minimum balance, a fee will be deducted from your account.
Withdrawal limits
Saving accounts have withdrawal limits, which is only six times a month, and a fee is charged if this limit exceeds. In some cases, saving accounts are changed to checking accounts if the limit is exceeded.
Change in rates
Interest rates in saving accounts vary, which means that banks are free to set interest rates as per their wish.
Checking account
- Pros
Spending records
Your expenditures are recorded, even if you write only checks. Check the copies or electronic or paper statements kept by the bank, which makes it easy to manage your expenditure and create a personal budget.
Interest on balance
Although most banks require a minimum balance in checking accounts to avail this benefit, the interest rates for savings will be same for checking accounts.
Low maintenance cost
Checking accounts come free of maintenance costs. You won’t have to pay anything for drawing money if there are no overdrafts.
- Cons
Blocked access to cash
If the bank feels something fishy, they can cancel or restrict a purchase. They can block the account, making it inaccessible.
Spending habits can be tracked
Checking account transactions can be accessed in the future. Though nobody can access it without your permission, organizations can use your spending habits for targeted advertising.
Knowing about savings and checking accounts – pros and cons will help you decide where to put in your money. You can also discuss it with your finance expert for any doubts.
