At very first, various natures and practices of human as Casual Saver, Regular Saver, Dedicated Saver, Joint Account Holder, Regular Spender, Already in Debt, Mortgage Holder etc. are being discussed to understand the different situations and take correct decision to select proper savings account.
Before you begin hunting around for the best savings account you can find, consider this: there is no such thing as the 'best' savings account. Even if your best friend swears that his account is better than any other, or if your mum tells you hers is the best available, it won't make a difference. Those people mean well, but they simply don't have the same level of savings as you, the same spending patterns as you, the same income as you, and they certainly don't have the same goals as you.
There is only the best savings account to suit you, your individual financial situation and your personal savings goals.
Choosing the right savings account for you begins by trying to determine your own needs and your own financial situation. From there it's much easier to narrow down your options for which account type might suit you best.
* Casual Saver
When your pay arrives in your bank account, do you try to make sure you leave some of that money in your account to act as your savings? There are some people who are quite happy to leave their savings mixed in with their transaction account each week.
The unfortunate part about trying to save money in the same account you access regularly to pay for other things is the temptation to spend more than you intended. You may also find it hard to keep track of exactly how much you're saving each week or month this way.
Casual savers can benefit from opening a separate savings account with very low, or no account fees. This will make it easier to work on building up those savings when you have some extra cash and make it much easier to build up. You also don't risk accidentally spending more than you meant to if that money is mixed in with your regular spending cash.
Another benefit is that you could be earning more interest on the amount you save. By having a dedicated savings account that is separate from your transaction account, you can shop around to find one that still allows you to access your savings when you need them but that still offers a good rate of interest.
* Regular Saver
Some people are much disciplined about their savings habits. These people will put aside regular amounts of money into a savings account and continue to build up their savings balance as often as they can.
No matter whether you're saving for a specific purpose, such as a home deposit or an overseas holiday, finding ways to maximize your savings and minimize your costs can help you reach your goals faster.
Before you begin shopping around for the highest savings interest rate you can find, it's important to consider whether you'll want to access that money or not.
For example: if you are saving for a home deposit and you know your current savings goals will take you another year to reach your target, you won't want to lock away your savings in a term deposit for five years. Instead, think about maybe only setting a term of 6 months or 12 months, or even finding a savings account that doesn't lock away your money at all.
There are plenty of savings accounts available offering attractive interest rates, yet still allowing you to access your money when you need it. You're able to add to your savings when you want to and you can withdraw the amounts you need when you've reached your goal. You also don't have the inconvenience of breaking out of a term deposit agreement and potentially incurring penalty fees for withdrawing your money early.
* Dedicated Saver
If you're a dedicated saver and you simply want a secure account to park your money, yet still earn a good rate of interest each month, you could benefit from shopping around for a long-term deposit account.
Term deposit accounts are available in various terms, ranging from 1 year to 5 years in most cases. It is possible to find shorter term accounts that might allow you to fix in for 6 or 9 months if you need a shorter duration for your savings goals.
Some customers also like the security of knowing exactly how much return they'll be receiving on their initial cash investment. There's a measure of safety in having a portion of your investment portfolio in cash, rather than all put into the stock market or into mutual funds where the returns can vary greatly depending on the markets.
There are also some customers who have very large amounts of savings who derive a supplemental income from the interest they earn on their savings. For these people, shopping around for a great term deposit interest rate over a longer term can be beneficial.
* Joint Account Holder
If you're married or part of a couple, you might be able to benefit by putting your joint savings into the name of the partner with the income in the lower tax bracket. This could reduce the amount you're likely to pay in tax on any interest earned on your savings.
* Regular Spender
Think about your current savings account and how you use it now. Many people have their wages or salary paid directly into a bank account each week or fortnight. That money is easily accessible, allowing you to withdraw your cash directly or via ATM or even make payments through online banking or phone banking.
This kind of usage means your savings account is your regular transaction account. Unfortunately there are some banks and lending institutions that severely limit the number of transactions allowed on some types of accounts. If you make more transactions in a month than your transaction account allows for, you could find you're charged steep excess transaction fees. These fees are often shown at the end of your monthly statement.
The options open to you are simple: either make less transactions each month or consider switching to a different account with an alternative bank, credit union or financial institution.
If you regularly receive high monthly fees for your account usage, you might find it's cheaper to shop around for an account that offers a lot of monthly transactions each month for a low monthly fee, or even fee free if you can find one. It's also possible to find accounts that offer unlimited amounts of transactions each month without those hefty fees.
* Already In Debt
If you already have some outstanding debts, you may want to consider working out a debt reduction plan for these before you begin your savings plan. This is generally because the interest you're paying on credit card debt or personal loan debt is much higher than the rate of interest you'll earn on a savings account.
Work towards repaying your balances first. When you're done and those debts are gone, think seriously about putting your previous monthly debt repayments into a savings account. You were already used to living without that money each month and you were getting along okay, so continue putting that money aside to build up your savings.
* Mortgage Holder
If you have a mortgage, take a look at the interest rate you're paying right now on the money you owe. You'll find that the rate you're paying is far in excess of the amount you're likely to earn on your savings.
So why would you need a savings account paying you less than you're being charged?
If you're saving for a specific purchase, such as a holiday or a home renovation, why not check whether your mortgage has a redraw facility. Most mortgages offer this kind of facility these days, so check whether yours is available and if there are any restrictions placed on it. You might find some lenders may charge you a redraw fee or they might have a minimum withdrawal amount you must abide by.
Once you know whether you can access your savings from your mortgage or not, it makes sense to pay your savings directly into your mortgage. You won't be earning interest on those savings, but you will be paying far less interest on the amount you owe and you can still access your money when you need it.
Of course, your mortgage may have an offset account linked to it. An offset account is simply a regular savings or transaction account that is linked to your mortgage account. As your savings grow, the amount of interest you pay on your mortgage balance is directly offset by this amount.
For example: if you owe Rs.250,000 and you have Rs.10,000 saved in your offset account, you would only be charged interest on the difference, which is Rs.240,000.
Before you begin hunting around for the best savings account you can find, consider this: there is no such thing as the 'best' savings account. Even if your best friend swears that his account is better than any other, or if your mum tells you hers is the best available, it won't make a difference. Those people mean well, but they simply don't have the same level of savings as you, the same spending patterns as you, the same income as you, and they certainly don't have the same goals as you.
There is only the best savings account to suit you, your individual financial situation and your personal savings goals.
Choosing the right savings account for you begins by trying to determine your own needs and your own financial situation. From there it's much easier to narrow down your options for which account type might suit you best.
* Casual Saver
When your pay arrives in your bank account, do you try to make sure you leave some of that money in your account to act as your savings? There are some people who are quite happy to leave their savings mixed in with their transaction account each week.
The unfortunate part about trying to save money in the same account you access regularly to pay for other things is the temptation to spend more than you intended. You may also find it hard to keep track of exactly how much you're saving each week or month this way.
Casual savers can benefit from opening a separate savings account with very low, or no account fees. This will make it easier to work on building up those savings when you have some extra cash and make it much easier to build up. You also don't risk accidentally spending more than you meant to if that money is mixed in with your regular spending cash.
Another benefit is that you could be earning more interest on the amount you save. By having a dedicated savings account that is separate from your transaction account, you can shop around to find one that still allows you to access your savings when you need them but that still offers a good rate of interest.
* Regular Saver
Some people are much disciplined about their savings habits. These people will put aside regular amounts of money into a savings account and continue to build up their savings balance as often as they can.
No matter whether you're saving for a specific purpose, such as a home deposit or an overseas holiday, finding ways to maximize your savings and minimize your costs can help you reach your goals faster.
Before you begin shopping around for the highest savings interest rate you can find, it's important to consider whether you'll want to access that money or not.
For example: if you are saving for a home deposit and you know your current savings goals will take you another year to reach your target, you won't want to lock away your savings in a term deposit for five years. Instead, think about maybe only setting a term of 6 months or 12 months, or even finding a savings account that doesn't lock away your money at all.
There are plenty of savings accounts available offering attractive interest rates, yet still allowing you to access your money when you need it. You're able to add to your savings when you want to and you can withdraw the amounts you need when you've reached your goal. You also don't have the inconvenience of breaking out of a term deposit agreement and potentially incurring penalty fees for withdrawing your money early.
* Dedicated Saver
If you're a dedicated saver and you simply want a secure account to park your money, yet still earn a good rate of interest each month, you could benefit from shopping around for a long-term deposit account.
Term deposit accounts are available in various terms, ranging from 1 year to 5 years in most cases. It is possible to find shorter term accounts that might allow you to fix in for 6 or 9 months if you need a shorter duration for your savings goals.
Some customers also like the security of knowing exactly how much return they'll be receiving on their initial cash investment. There's a measure of safety in having a portion of your investment portfolio in cash, rather than all put into the stock market or into mutual funds where the returns can vary greatly depending on the markets.
There are also some customers who have very large amounts of savings who derive a supplemental income from the interest they earn on their savings. For these people, shopping around for a great term deposit interest rate over a longer term can be beneficial.
* Joint Account Holder
If you're married or part of a couple, you might be able to benefit by putting your joint savings into the name of the partner with the income in the lower tax bracket. This could reduce the amount you're likely to pay in tax on any interest earned on your savings.
* Regular Spender
Think about your current savings account and how you use it now. Many people have their wages or salary paid directly into a bank account each week or fortnight. That money is easily accessible, allowing you to withdraw your cash directly or via ATM or even make payments through online banking or phone banking.
This kind of usage means your savings account is your regular transaction account. Unfortunately there are some banks and lending institutions that severely limit the number of transactions allowed on some types of accounts. If you make more transactions in a month than your transaction account allows for, you could find you're charged steep excess transaction fees. These fees are often shown at the end of your monthly statement.
The options open to you are simple: either make less transactions each month or consider switching to a different account with an alternative bank, credit union or financial institution.
If you regularly receive high monthly fees for your account usage, you might find it's cheaper to shop around for an account that offers a lot of monthly transactions each month for a low monthly fee, or even fee free if you can find one. It's also possible to find accounts that offer unlimited amounts of transactions each month without those hefty fees.
* Already In Debt
If you already have some outstanding debts, you may want to consider working out a debt reduction plan for these before you begin your savings plan. This is generally because the interest you're paying on credit card debt or personal loan debt is much higher than the rate of interest you'll earn on a savings account.
Work towards repaying your balances first. When you're done and those debts are gone, think seriously about putting your previous monthly debt repayments into a savings account. You were already used to living without that money each month and you were getting along okay, so continue putting that money aside to build up your savings.
* Mortgage Holder
If you have a mortgage, take a look at the interest rate you're paying right now on the money you owe. You'll find that the rate you're paying is far in excess of the amount you're likely to earn on your savings.
So why would you need a savings account paying you less than you're being charged?
If you're saving for a specific purchase, such as a holiday or a home renovation, why not check whether your mortgage has a redraw facility. Most mortgages offer this kind of facility these days, so check whether yours is available and if there are any restrictions placed on it. You might find some lenders may charge you a redraw fee or they might have a minimum withdrawal amount you must abide by.
Once you know whether you can access your savings from your mortgage or not, it makes sense to pay your savings directly into your mortgage. You won't be earning interest on those savings, but you will be paying far less interest on the amount you owe and you can still access your money when you need it.
Of course, your mortgage may have an offset account linked to it. An offset account is simply a regular savings or transaction account that is linked to your mortgage account. As your savings grow, the amount of interest you pay on your mortgage balance is directly offset by this amount.
For example: if you owe Rs.250,000 and you have Rs.10,000 saved in your offset account, you would only be charged interest on the difference, which is Rs.240,000.