Rihanna, an online tutor at TAE, recounts her college life experience, saying that her biggest milestone in college was opening a checking account. Well, it’s true for most of us. When we open our first checking or savings account, we are all excited. These are the two financial tools that will help you greatly improve your college and post-college life.
Now, let’s understand a little about these two accounts, and then we’ll discuss the advantages and disadvantages of the checking account and the savings account.
A checking account helps you pay your bills, while an online savings account helps you accumulate your money and keeps you better prepared for future contingencies. Now, while there are plenty of advantages to both savings and checking accounts, there are also an equal share of negatives to both accounts.
Therefore, before opting for one or both, you should have a thorough understanding of the pros and cons that you might experience as a result of opening these accounts.
Advantages of the current account
With a checking account, you get unlimited access to both mobile banking and online internet banking. Also, you get a debit card and can use it to withdraw money from the ATM or make purchases. You can also withdraw money directly from your till if you don’t have a debit card or use checks to make purchases or payments. Tahira, account manager for EduWorldUSA, says she finds it relatively easier to deposit workers’ paychecks into her checking account.
Also, through the direct deposit facility, the employer can automatically transfer the amount of their payroll into the bank account of the employees. This helps save a lot of time and there is no need to visit the bank to cash paychecks.
Also, the good thing about checking is that these accounts are insured by the FDIC, which is the Federal Deposit Insurance Corporation.
Thus, in your checking account you will be able to enjoy a guarantee of approximately $250,000. This directly implies that the account holder’s money is safely stored in the bank.
Disadvantages of the checking account
As good as it looks and sounds, the checking account certainly has its share of downsides. Lauren, who is a tutor at TFTH, shares her experience and says that she hates the fact that there are a lot of fees applied to checking accounts. Some of the fees that the checking account holder must pay each month include ATM withdrawal fee, maintenance fee, phone transaction fees, and bank transaction fees.
Thats not all. There are some banks that will also want you to maintain a minimum balance. If you don’t, you will be charged a fee each time your balance falls below the required balance.
In addition to this, there are limitations to your ATM withdrawals. There is also a fee applicable to the use of your debit card, and potential overdraft fees apply as well.
Advantages of savings accounts
The savings account is a perfect solution when you want to accumulate all the extra money in an account and, at the same time, earn money on this amount in the form of interest. One of the main advantages of the savings account is that it allows you to withdraw your money whenever you want, unlike the Certificate of Deposit or long-term investments.
Also, to open a savings account, you will need a very small investment amount. However, it certainly depends on the type of account you open. Just like your checking account, even your savings account is insured by the Federal Deposit Insurance Corporation.
Therefore, even if the banks fail at some point, your money remains safe. Anaida, who is a popular TrumpLearning online course educator, says that one feature she loves about a savings account is its automatic deduction feature, where you can pay bills automatically without worrying about the due date. In addition, the monthly fee applicable to a savings account is also very low.
Disadvantages of savings accounts
Since it is easy for the account holders to withdraw money from the savings account, it is difficult for them to have real savings. Not having savings can be a problematic situation and can be dangerous in case of contingencies.
In addition, the interest that the savings account earns you on savings is low. It is lower than almost all other types of investment.
Additionally, many savings accounts have a minimum balance requirement. At any time, if the account holder cannot maintain this balance, he will have to put up with some changes. These charges are sometimes so high that they even negate the interest thus earned.
Another downside to savings accounts to know is that as part of the FDIC insurance, you’re covered up to $250,000. This could be a concern for people who have more than the amount parked in their savings account.
Categories: Technology
Source: SCHOOL TRANG DAI
