There was a time when everyone had a savings account. It was a place to put away money for things that were needed later in life like cars, housing, or schooling. The account would be opened up and money would be faithfully added every week even if it was a small amount. The money would also accumulate interest as time passed. Savings accounts used to be very useful. However, with the current economy, increasing fees, and the uncertainty of the banking industry, people often wonder if savings accounts are still useful today. They wonder if it is still safe put money into a savings account or if it would be better off to tuck money underneath the bed.
There is no right or wrong answer to this question. Whether or not to open up a savings account is the individual customer’s decision. One good point about a savings account is that it still accumulates interest. That is something that is not likely to happen if the money is held at home. Also, the FDIC will still insure the funds up to a certain amount. If money is saved at home and it gets stolen it is just gone forever. So as far as safety and actually earning extra money, it does appear that the savings account is still useful.
There is also an old saying “Out of sight out of mind”. Having the money put away somewhere where it can not be easily accessed is a great way to forget about it until the right time. No matter how strong willed a person may be it still might be difficult to avoid temptation if the funds are within reach. That is another solid reason why a savings account would still be useful.
Basically a savings account can be as useful as an individual wants it to be. It can be a great place to create a nest egg for one’s self while also reaping the benefits of the yearly interest earnings. Some banks still have excellent interest rates for savings accounts so the more money that is stored the bigger the return a customer could get.
On the other hand, savings accounts will only benefit a person who is serious about saving money. It will not be useful for a person who will get frequent urges to withdraw funds and it may actually harm a person who owes creditors. With this knowledge, anyone thinking about opening up a savings account should be able to make an intelligent decision.
In general I say: If you’re too lazy to spend time learning about the markets – or too afraid to risk anything – the saving’s account still makes a lot of sense!
Comment by Kendra — 28/08/2011 @ 16:13