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Why Savings Accounts Not Always The Best Place For Cash Assets?

Generally people have a perception that savings accounts keep their money safe while also allow them to earn money on savings in form of periodic interest. The cash in these accounts can be moved quickly and hence they are convenient for covering the unexpected expenses. But the fact which most of the people are not aware of, is that these account have certain demerits and strings particularly if an individual has extra money which else can be spent somewhere else.

Demerits of Savings Accounts

The savings accounts have many demerits when contrasted with other investment opportunities. The minimum balances, APY, low yearly percentage yield, and upper limits on different amounts are vital drawbacks which individuals generally ignore. The limits of the number of transfers and the transaction delays are some more downsides of these savings accounts.

Ensuing Are The Demerits Of Savings Accounts

  1. Limit on number of transfers – different banks impose different limits on transferring amount from one account to another. They might impose restrictions with respect to the withdrawals also.
  2. Transaction time delay – while transferring money, there may be some time delay involved. This delay can be from 1 to number of business days, all depending on the bank’s terms and conditions.
  3. Minimum Balance requirement – there are certain banks which enforce you to keep a certain amount of balance in your saving account and in case there is none then they charge you penalty.
  4. Low interest rate – the savings accounts offer low rate of interest as compared to other investment opportunities.
  5. Ease of access – most of the banks allows you to have access your savings accounts easily, and this might allure to overspending.
  6. Linked with stock market – if your savings account is associated with the stock market, you can end up either minting money or losing all your money.

At times you might put your money into your saving account without thinking much on their advantages and disadvantages. When it comes to your hard earned money, you ought to be very aware and understand the benefits and downsides of savings account. A large part of an individual’s future depends on what they decide to do with the resources that they possess. Savings accounts act as perfect resources from which the individuals can build what they opt to have in future.

The savings account has two sides – pros and cons. So one needs to be very careful while figuring out the pros and cons so that the individual reaches an informed decision.

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