Gold101.com - It's in Your Interest to Save
Everyone knows that it's smart to save money for a rainy day
. A lot of people open a savings account, and that's wonderful. However, not everyone makes sure that their savings account is interest-bearing. While there are several factors that go into determining whether interest would be worthwhile (average balance, mostly), it doesn't hurt to check. As long as your balance will be enough to avoid any service fees your bank may levy, then you would do well to consider this option.
While most banks offer low interest, sometimes as low as 0.4%, or as high as 1.44% (maybe even higher) it can add up quickly. Suppose you have $1,000 in your savings account. At the low end, you'd accrue $4.00, and at the high end, you'd accrue $14.40 a month.
While neither of these figures are considerably large, if your principal balance stayed at $1,000 all year, you'd earn at least between $48 and $172.80 per year, and likely more, because your principal balance would grow with the addition of interest payments. Obviously, if you put even more money into savings throughout the course of the year, your interest payments would grow.
Look at interest payments as free money. When you put money into savings, it's typically just sitting there. Why not put it to work for you? Even at a low end payment of $48 per year, over 10 years, that's $480. With a standard savings account that bears no interest, you earn nothing extra, making interest something that's quite honestly in your best interest.
One thing that should be mentioned is that interest payments must be reported on your income taxes. You will get the appropriate tax form from your financial institution in time to file your taxes. Even so, it's still worthwhile to open an account that's interest bearing, because of the possibility to earn higher payments as your principal balance grows.
Of course, you will want to make sure that the savings account you open is insured by the Federal Deposit Insurance Corporation (FDIC), so that if your financial institution should collapse, you will be covered up to $250,000. This is where a savings account can be an advantage over an investment account in that you will be insured even if the bank fails.
It also helps to do your research when it comes to interest-bearing accounts. Compare interest rates at various institutions, and make a decision that works best for you. After all, if one bank offers interest at 0.4%, but another offers it at 1.25% or higher, then you may wish to go with the latter bank.
No matter which institution you choose, choose one, and go with an interest-bearing account. Your savings account can only benefit from it.
Gold101.com - It's in Your Interest to Save
By: Gold101.com
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