Saving account refers to an account in which one places money to earn small amount of interest. Saving account funds are easily accessible and some bank charges some amount during the withdrawal of money early. People can withdraw money at any time they want from their saving account, at least when the bank is open or they can withdraw the money from the ATM’s.
Here, the term “bank” is used loosely. Credit unions and money market fund companies also offer saving accounts to their customers. In addition to earn interest on your deposit, the saving account provides a safe place to put your money far better than stowing in the cookie jar.
You need to shop around for a saving account which offers the best interest rates. Before, it was often the case that the banks would offer higher interest rate than the credit unions. This was because the credit unions would offer lower interest rates that the banks rate to the customers who borrow money. Sometimes credit unions are quite competitive in the rates than other banks. The rate of money market funds keeps on changing. The rate which will be earned will depend upon the stock market, so there are the chances that the rates will be high and low, as it depends on the share rates.
Many people wonder on how saving account works and how profitable are it to the bank or other financial institution. For this the simple explanation will be that you will be lending your money to the financial institution and in return bank will offer you some part of interest rate which they charge to every customer. The bank makes profit and you make profit on your money in a savings account.
Sometimes people prefer to use interest in checking account instead of a saving account. If you are wishing to not use some money for few months or years then you can use saving account to save your money and you can even get some interest on it. Interest checking account pay less interest than that of a normal saving account, as in that you will need to maintain the minimum balance of 1000 USD.