Most people deposit their paychecks into a checking account, which they then use to pay bills and make purchases. Many people also have a separate savings account. Are you thinking about opening one? Learn why it makes good financial sense for everyone to have a savings account.
- Build savings: One major reason to open a savings account is to earn interest. As the pandemic-related economic crisis continues, investment rates for savings accounts remain quite paltry. However, even a low rate is better than the 0% APY that most checking accounts offer.
- Reduce spending: Savings accounts don’t come with debit cards, so it’s hard to use your savings to buy something on a whim. For a hands-off approach, you can set up recurring automatic transfers from your checking account or divide direct deposits between both accounts.
- Meet short-term savings goals: If you only have a checking account, the line is blurred between your spending and saving funds. Open a savings account, and you can tell at a glance how much extra money you have set aside. You can even open multiple savings accounts and label them “Christmas,” “vacation,” and “emergency fund.”
- Maintain easy access to your money: Unlike a Certificate of Deposit (CD) and other investments that lock your cash away, you always have access to the funds inside a savings account. You can withdraw money anytime without paying a penalty fee, a critical feature to help you stay prepared for unexpected car repair bills, medical costs, and other financial emergencies.
- Keep your money safe: Brokerage accounts can lose money in response to downswings in the stock market. However, a savings account balance will never go down (unless you take money out of it). For instance, back in 2008, when the S&P 500 dropped nearly 40% of its value in a single year, savings accounts everywhere continued to hold their full value. This assurance is extremely appealing, especially if you can’t afford the risk. Plus, as long as you save with an FDIC-insured bank or NCUSIF-insured credit union, the government will cover up to $250,000 in bank failures.
- No hefty investment required: Most savings accounts have a low minimum balance requirement, typically from $300 to $500. Some also require a minimum monthly transfer. Make sure you understand the rules before opening a savings account. Otherwise, you could incur fees.
While opening a savings account and building an emergency fund can help you avoid financial tight spots, we understand that unexpected expenses can still crop up. Rest assured that VIP Title Loans is here for you when you need cash fast! We have the lowest interest rates in Texas and flexible repayment plans to help you pay off your loan successfully.
If you own a car, have a valid photo ID, and can show proof of income, you may qualify! Call us at 817-265-2274, fill out our online contact form, or visit one of our five locations in the DFW Metroplex for more information.