7 Tips for Getting the Most Out of Your Savings Account

A savings account may not only provide shelter for your money, but it can also help in building up your finances as you continue to work towards specific goals. Savings accounts are not an investment like stocks, which will grow your money, but a safe, accessible way with stability for building the foundation for your finances. Here are seven practical tips for maximizing the benefits of your savings account, and what is the best savings account in Pakistan.

1. Choose the Right Type of Savings Account

The savings account type chosen depends on the specific financial needs. Therefore, it is very crucial to select the right one. A standard savings account offers relatively low interest but has high accessibility. High-yield savings accounts give you higher interest rates which compound your savings faster. Other special accounts, like money market accounts, offer extra benefits such as check-writing capability. Think about your goals: do you need liquidity, more interest, or easy access?

2. Use Compounding Interest

Compound interest saves much more money in the long run. The more frequently the interest compounds, the higher your earnings are going to be. Many institutions compound daily, monthly, or quarterly. Compounding frequencies affect comparisons of savings accounts because it all depends on the Annual Percentage Yield. 

What you are actually looking for is letting your savings sit with the bank as much as you can, so it compounds month-to-month and year-over-year to add up more firmly.

3. Automated Transfers

An easy way to accumulate savings is to set up automatic transfers from your checking account. You can treat your savings as just another bill, as a portion of every paycheck automatically is transferred into your savings account. "Pay-yourself-first" is the notion, but by doing so, you really create an easy habit that helps build your account without even thinking about it. Small contributions frequently add up over time.

4. Pay Attention to Fees and Penalties 

Some savings accounts charge hidden fees or incur penalties that quietly erode your savings. In some cases, these fees can include maintenance fees monthly, ATM charges, or penalties for failing to maintain a minimum balance. When you open a savings account be sure to check the bank's fee schedule and seek out accounts that do not charge fees or have minimum balance requirements. Savings accounts may be free online, or indeed have less in terms of service charges than a traditional brick-and-mortar bank might have. So exploring these would ultimately help you save more money in the long run.

5. Shop Around for Interest Rates

Sometimes, the interest rate is affected by the economy, and a bank responds by raising or lowering its rates. In order to optimize earnings in a savings account, it's good to monitor the interest offered by your bank, especially if you are operating from a high-yield account. 

Some other banks offer introductory promotions for new accounts, but after several months, the promotional rates get dropped. When the interest rate is no longer competitive, you would definitely have no option but to take the money elsewhere in an account or bank that would charge a more attractive rate.

6. Savings Account for Short-term Goals

Savings money in a savings account doesn't offer significant growth compared to investments. But this is the best opportunity one could have for a short-term goal, such as saving for vacation, emergency fund, or even down payment on a new vehicle. Keeping money aside for these goals can save you from spending through credit or loans, typically weighed up with interest costs.

7. Leverage Account Perks and Rewards Programs

Most banks now offer rewards or perks to save. Many savings accounts come with cash back, discounts, or special rates for certain spending categories. Others may include rounding up every purchase with your debit card to the nearest dollar and depositing the difference in your savings account. These can add up quickly. 

Ask whether your bank offers any unique features or partnerships that can be useful to you, such as referring you to a credit card, which rewards you with bonus points, or a checking account with a rewards program.

Bottom Line

By using such strategies, you can maximize your savings account and take a proactive approach to managing your finances. Remember that a successful savings strategy involves building up the balance and ensuring that it's growing in the best possible environment. Contact JS Bank for opening a savings account with multiple benefits.