What kind of account should I open to deposit my savings in?
Reward your future self with some sense of financial stability by putting your money where it belongs. A savings account safeguards your money while earning a fixed interest rate; and a checking account manages your finances by keeping track of your expenditures through the use of checks. A time deposit account, on the other hand, allows you to store your money for a fixed term, while it earns higher interest. “When thinking about investing, you should first think about how liquid your money needs to be, or how quickly you should be able to access it,” says Fleur Bradley, financial advisor of Forbes.com.
TIP: Before opening an account, Bradley says it’s important to ask yourself: “How likely are you to have to withdraw it again?” If your finances are stable enough, consider opening a time deposit account, which earns higher interest.
Shop Around For Higher Interest Rates
Just like shopping, you would want to get the best out of your money when it comes to choosing the right bank. Go with a bank that will give you a higher interest rate for your savings. “Getting earnings from your earnings helps turn a small amount of money into a lot of money over time,” explains Jonathan Pond, author of Grow Your Money!
Money-Saving Tip: Avoid Bank Fees
“Once a customer opens an account, the pressure is on to open three more,” says Andrew Beattie, financial writer for Forbes.com. The bank encourages its customers to avail more of their products and/or services, and charges more for each one availed. Choose products or services that are applicable to you, or else you may end up paying fees for those that you don’t actually use. Don’t be afraid to talk to a bank representative on waiving fees for services you don’t use.
How To Be Financially Literate
Do your research!
If words like “compound growth,” “equity,” and “premium” are giving you more headache than receiving a jejemon text, then it’s time to read up on the basics when it comes to financial lingo. “So much money is lost by folks who think they understand an investment—and don’t,” shares Ilyce Glink, author of 100 Questions You Should Ask About Your Personal Finances. There are a lot of self-help books and articles that can answer your specific questions. Remember: GIYF (Google is your friend).
This story originally appeared in Cosmopolitan magazine, August 2010.
* Minor edits have been made by Cosmo.ph editors