How Savings Accounts Work.
Savings and other deposit accounts are important sources of funds that financial institutions can turn around and lend to others. For that reason, you can find savings accounts at virtually every bank or credit union, whether they are traditional brick and mortar institutions or operate exclusively online. In addition, you can find savings accounts at some investment and brokerage firms.
Savings Account Advantage : Savings accounts offer you a place to put your money that is separate from your everyday banking needs, allowing you to stash money for a rainy day or earmark funds to achieve a big savings goal. What’s more, the bank’s security measures, along with federal protection against bank failures provided by the Federal Deposit Insurance Corporation (FDIC), will keep your money safer than it would be under your mattress or in your sock drawer.
Savings Account Disadvantage :
Savings Account Disadvantages
The trade-off for a savings account’s easy access and reliable safety is that it won’t pay as much as other savings instruments. For instance, you can earn a higher return with certificates of deposit or Treasury bills, or by investing in stocks and bonds if your time horizon is long enough. As a result, savings accounts present an opportunity cost if used for long-term savings.
