Learning to save your money is one of the major foundations in developing a financial plan for your future. It can help to ensure you have some money set aside incase of any financial emergencies or you could use it to invest on various projects or financial opportunities. However, it will often require some amount of discipline and determination to stick with a savings plan. Here are some of the major tenets that constitute interest rates savings accounts and how to go about selecting an interest rate savings account.
An interest rates savings account is financial investment vehicle, which provides a safe place to save your money for future use. Financial institutions will offer their clients a return on their investment, in exchange for placing your money in an interest rates savings account. The interest rate pegged on savings accounts will typically be lower than those earned by other investment options, such as bonds, mutual funds, etc, due to the fewer restrictions on withdrawals and lower risk of loss.
The deposits on interest rates savings accounts are federally insured Federal Deposit Insurance Corporation (FDIC), for up $250,000. Before you open a savings account, always check with the Federal Deposit Insurance Corporation (FDIC) whether your account has FDIC protection. If you have savings that exceed the maximum coverage provided for savings accounts, then you could open more than one account.
Interest rates savings accounts are offered by a number of financial institutions, such as commercial banks, savings and loans institutions, credit unions and mutual savings banks. Each institution will utilize its own set of rules and regulations on your ability to open an account and the interest earned. Credit unions and mutual savings banks will often place restrictions on membership, based on location or group affiliation. They are also owned by their members and will typically offer higher interest rates on savings as compared to the others.
The Federal Reserve requires banks to maintain a percentage of their total funds, for quick access by their customers. To ensure that this reserve is achievable, banks are allowed to place limits on the number of withdrawals clients can make within a certain period. The standard limit of withdrawals on interest rates savings accounts is six monthly withdrawals. However, some banks will allow client’s to exceed this limit, but they will also caution an account holder that their account will be closed if they exceed the limit again. Accounts that exceed their withdrawal limit more than three times in 12 months are required to be closed as per the Federal Reserve Regulation D rules and regulations.
Sources and Citations
If you are thinking of opening an interest rates savings account, here are some of the key factors to look into:
Introductory bonus rates: some savings accounts will offer an introductory bonus rate of interest. However, since this interest rate is only active for a short period, and will revert to a lower rate when this period has expired. Once this period is done you could always opt to switch to a better interest payer or stick with your current one.
The safety rating of a financial institution.