Why Should You Consider Opening a Savings Account?

Estimated reading time: 2 minutes

Savings accounts are often overlooked as just another bank account, although they still hold value for everyone. A savings account is a deposit bank account designed to hold money you don’t plan on spending immediately. Unlike a checking account, savings accounts often accrue interest. If you’re wondering if a savings account is right for you, here are three reasons why they’re beneficial.

1. Budgeting Assistance

A savings account can help you organize your finances, making it easier to plan for future major purchases, like a new car or home. If you keep all your cash in a checking account, it can be hard to see your progress while also juggling day-to-day expenses. If you separate your savings into a proper savings account, it’s easier to monitor the growth of your money.

2. Accessible Funds, Just in Case

You have more access to your money when using a savings account when compared to long-term investment accounts. If you need some extra funds from your savings, it’s easy to transfer funds into your checking account. Automated teller machines, or ATMs, allow people to take cash out of their accounts quickly.  Keeping your emergency funds in a savings account ensures you can access them faster—you never know when you’ll need a major car repair, or another emergency arises.

3. Insured and Safe

When you have more money than you need for expenses or immediate investment, it’s important to keep it safe. Stock and bond investments are not ensured by the Federal Deposit Insurance Corporation (FDIC), meaning a possible loss cannot be recouped. In contrast, up to $250,000 of your savings account money is guaranteed in case your bank fails. Banks and credit unions are safer places for excess money, rather than just carrying around cash. While you should always monitor your money and accounts, it helps that insured banks and credit unions address additional failure risks, such as identity theft, fraud, and bank errors.

Investments don’t always have to mean high risk and less access to your money. A savings account is a great addition to any financial portfolio, allowing you to consciously save money and be a smarter spender! For a mortgage lender that is with you every step of your financing journey, contact us today!