FinanceHow to Choose the Right Savings Account For Your Family

How to Choose the Right Savings Account For Your Family

Savings accounts are not just for stashing your hard-earned money anymore. In a world of ever-rising costs, it's important to find a way to grow your profit without having to spend too much in the process. 

A great place to start is to open a savings account for your family. To know how to choose the right savings account for your family, keep reading.

Savings Account

By choosing a savings account that matches your purpose for saving, you can minimize fees and maximize interest on your money. There are many different kinds of savings accounts, each with its type of benefit. 

If you’re looking for a place to stash cash and grow your money, here are some common categories of savings accounts and how they can help you reach your financial goals.

Basic Bank Savings Account

Basic bank savings accounts are a good place to park your money while looking for larger investment opportunities. They come with few restrictions on access and typically offer lower interest rates than other types of savings account options.

Teenage Savings Account

Teenagers often have no idea how to handle their money, so they must have a safe place to park their cash. A savings account is a great way to introduce them to saving, spending, and managing money. 

If your teen has a regular income, a savings account may be just the thing to help them learn to budget. There are also special perks that can help encourage saving, like higher interest rates and incentives for better grades.

Online Savings Account

Online savings accounts are easy to set up and manage. You won’t have to worry about trips to the bank or lengthy phone calls – everything you need can be done online or with a few clicks on your phone. These accounts also typically offer higher interest rates than traditional bank savings accounts because they don’t have the overhead costs associated with brick-and-mortar locations.

Credit Unions

Credit unions are member-owned, nonprofit financial cooperatives. They may offer higher interest rates for savings and checking accounts, but you’ll have to open an account with a $5 deposit—and yes, that does count toward your minimum balance.

Senior Savings Account

Help your parents boost their retirement savings. Investing in a senior savings account can help your parents maximize their savings and enjoy withdrawal flexibility. Many banks offer similar features, such as reward point earnings and ATM card usage. The initial deposits also tend to be on the higher side, but you’re guaranteed a good interest rate.

Things You Need To Consider

A savings account might be one of the simplest products in the financial space, but there are still a few things to consider before opening one. Here are a few things to consider when choosing and opening an account.

Interest Rates

If you're looking to save money, you must consider how much interest you will make once the initial rate is over. In most cases, if you don't bring in a lot of cash throughout the year, it may not be worth it after that initial period ends.

Notice Period

Some accounts have a notice period. Withdrawing funds during this time could result in an early withdrawal penalty.

Debt

Remember, you won’t be able to save much if you have a lot of debt. Debt Recovery Australia can help you manage re-payments without much effort.

Tax 

Investing in a tax-free ISA is a great way to grow your savings. Make sure you get the full advantage of this government incentive by not paying more tax than necessary when filling out your Self-Assessment Tax Return.

Payment of Interest

Some savings accounts pay interest monthly, while others pay annually. This is usually less than a 0.1% difference, so it will not be a big deciding factor. The interest rate depends on the account you have opened and the balance you hold in your account. So, check the rates before opening an account with a financial institution.

Minimum Deposit

As a condition of your account, you may be required to make a specified minimum deposit and possibly a certain number of deposits in any given period. Deposit size and frequency will depend on which type of certificate of deposit you choose.

Conclusion

Making savings a habit is not only the best way to reach your financial goals, but it's also very rewarding. Everyone should be able to start their journey on the right path with as little impact on their current life as possible. 

References: 

Choosing the Right Kinds of Savings Accounts for Your Family (ringgitplus.com)

Choosing Savings Options (practicalmoneyskills.com)

Tips For Choosing A Savings Account | The Money Charity

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