Savings Account Basics
If you're building an emergency fund, saving for a big purchase or getting money together to invest, using an insured savings account can put you on the right road.
Getting Interest
With a savings account, you earn dividends or interest on the money in your account at a specific rate on a regular schedule. What you earn depends on the rate the financial institution pays and on the specific account guidelines.
Regular Rules
The most basic accounts, where you can deposit and withdraw money, are often called prime share savings, regular savings or sometimes statement savings accounts. This means that any activity in the account—deposits, withdrawals, fees or interest earnings—and your current balance are reported in a printed or online account statement, usually once a month.
A Penny Saved is a Penny Earned
You earn interest on a basic savings account only if you keep at least the required minimum on deposit. If your balance is lower, some financial institutions won't pay interest and others may charge a fee for holding your money.
Deposit Insurance
The National Credit Union Administration (NCUA) is the independent agency that administers the National Credit Union Share Insurance Fund (NCUSIF). Like the FDIC's Deposit Insurance Fund, the NCUSIF is a federal insurance fund backed by the full faith and credit of the United States government.
Credit union deposits in savings, savings certificates and share-draft/checking accounts are federally insured by the National Credit Union Administration (NCUA) up to $250,000. IRAs are insured separately to $250,000.
Overall, storing money in a savings account is an ideal way to save for the future while earning interest.
To see how quickly your savings can grow, try using a savings calculator to experiment with the dollar amounts, number of years and interest rates.
Learn more about saving accounts options and current rates.
Source: Banzai
Content provided for informational purposes only and should not be interpreted as legal advice on any subject matter.