Getting the most from Savings Accounts

Usually saving accounts are a one size fits all type of long term, low interest investment account that people put their money in and leave. Actually, many people only put their money there for the express purpose of taking it out later, thinking to earn a few cents in the interim.

Actually, this type of thinking represents a limited view on what accounts can do for an investor, and with a little research and proper investing, the savings account can actually be a very good investment for most people.

First, it must be stated that there are many different types of accounts.

The one that everyone knows about is the lower interest rate vanilla account, in which an investor just puts in money, there are no checks attached to the account, and the going interest rate is paid. This is the type of account for monies that maybe need to be used in a 6 to 12 month period for sure, and it must be easily accessed at that point, meaning that it can not be put into an investment like a CD or an annuity.

However, the business accounts that are also available from most of the same financial institutions provide more incentives for businesses (banks do that because businesses typically have larger amounts to save).

The first perk is that the IRS will look much more favourably upon a business with its finances completely separated from the personal finances of its proprietors.

The second reason to get business accounts is for the higher interest rate that they usually have, and the ability to move money around with more efficiency than with a personal saving account.

Banks also have what are known as high interest saving accounts, which kind of fill the void between regular savings accounts and longer term investments which do not allow investors to touch their money without penalty for a specific period of time.

In return for a higher interest rate, an investor accepts certain limitations on the use of his or her money. For instance, one may only be allowed to withdraw money a certain amount of times a month, and usually a minimum balance must be maintained to avoid service charges.

Most banks also pay larger interest rates and have many further incentives for those investors who open online saving accounts. This is because the bank saves money on overhead, staff, and physical appropriations with online banking. They pass those savings on to the customer in the form of higher interest rates.