It’s not just for savings accounts. If you’re like most Americans, you probably have a few different types of bank accounts: checking, savings, money market and maybe even an Individual Retirement Account. There are several reasons why having multiple accounts is smart—and they go beyond just being able to keep your money safe. In fact, there are many reasons why everyone should have at least one simple savings account in which they can stash their cash and watch it grow over time. Here are four of them:
Savings accounts are a safe place to stash your cash
In addition to being protected from theft and fraud, having a savings account means that your money is safe. Unlike other investments, you can’t lose money in a savings account. Even if the bank goes out of business or closes your account, because the FDIC insures it up to $250,000 (or $250,000 per owner), you’ll get back every cent that was in there. So the interest rates aren’t great—usually below 1 percent—but they’re better than nothing!
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They help you build up an emergency fund
You never know when unexpected expenses will pop up, and it’s always better to be prepared than take on more debt than necessary. In the event of an emergency, saving money means you won’t have to rely on credit cards or loans from family members or friends when things go sideways.
If something happens and your car breaks down, a savings account can help cover the cost of repairs. If someone gets sick in your family, having money set aside can give them peace of mind while they’re waiting for insurance coverage to kick in (and hopefully cover a good portion of their medical expenses). If a natural disaster like Hurricane Irma comes through town or an earthquake hits California again—you get the idea—having cash available will allow people time to prepare for what’s coming instead of panicking about how they’ll pay for things later on down the line.
They protect you against inflation
Inflation occurs when the price of goods and services goes up. Inflation is one of the biggest enemies of your personal wealth because when it happens, your money will also lose its value—you need to spend more money on less stuff.
A savings account helps you protect yourself against inflation by putting your cash into an investment that can keep up with it. You should always have at least some liquid amount so you can easily access it if needed.
You can use the money for a future investment or purchase
You can use the money in your savings accounts for several things. For example, you could buy a house or a car, pay for education expenses, pay medical bills and so on. You have complete control over what you do with the money when you have it in your savings account. You are not required to use the funds in any way but yourself, and it’s up to you whether or not you want to put them towards something big or just save them for rainy days.
In conclusion, savings accounts are a great way to save money and keep it safe. If you want to start saving now, open up a savings account today!
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