Importance of Savings Account Interest Rates

Updated March 6, 2014 ‚óŹ 1,193 views

While opening a bank account has been known to be one of the most important; in fact critical things that a person needs to do to store their savings, many people pay very little attention to the amount of interest that is earned on the balance in their accounts.

Savings accounts are the most basic forms of accounts that are offered by different types of banks such as private, foreign, co-operative, commercial, public-sector and postal departments. While a person can deposit their savings in this account and rest assured that it is safe, banks are also known to pay a small amount of interest (which varies from banking institution to institution) each month. This increases a person’s savings and in fact, is a profit as well.  

Thus, people can earn monetary returns while also being able to set aside a portion of their liquid assets. The other accounts which a person can open include a checking/current account, time deposit and money market accounts.

When choosing a savings account it is very important to compare the different interest rates that are offered by the different financial institutions. It is extremely easy to do this via different portals that are available online; showing a comparison of the different savings account interest rates all on a single platform. In fact, there are many financial institutions which are known to offer online-only savings accounts which usually are known to pay higher interest rates as well as higher security restrictions.

This rate is currently calculated based on the daily balance method. That means that a person will earn an interest which is based on the closing balance that is maintained every day. However, as the interest rate is compounded on a daily basis it is paid on a monthly or quarterly basis.

It is very important to remember that there will be different costs that are involved in the opening and maintaining of such accounts. Some of the different costs incurred include fees and service charges on the account, and the minimum balance requirements. It is very important to wisely choose a bank which offers the minimum service charges, rather than opting for a bank which charges unnecessarily high service rates. 

While the most common way to access these accounts is to visit the branch outlet where deposits and withdrawals as well as other transactions can be made; it is increasingly becoming popular to access these accounts online via the internet. People can access their accounts online; at any time and from any place so that they can make different transactions. One of the attractive methods of banking, known as mobile banking (SMS banking) has also been introduced for customers to make use of; thereby leading to an easier access to their accounts.

In fact, all of the banking transactions of the account holder can be maintained. This makes it easy for a person to keep a track of his/her spending’s.

The best part about these accounts is that there is no restriction for the number or even amount of deposits. These accounts are of continuing nature.


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