Joint Savings Accounts and If You Should Have One

The purpose of a savings account is to store money in a place where it accrues small amounts of interest. Banks, money market funds companies, and credit unions offer such checking and savings accounts to customers. Savings accounts are safe places to store money as they are insured up to $250,000 by the Federal Deposit Insurance Corporation, not to mention that customers earn interest on the deposits. This insurance is in place should the financial institution declare bankruptcy or have mismanaged funds.

At one time, banks would offer higher interest rates than credit unions, though presently credit unions have competitive rates. Money market funds’ rates fluctuate based on the stock market. It is wise to shop around for the best incentives prior to opening a savings account.

Savings accounts are profitable for financial institutions because the customer is lending the money to these institutions who then loan out that money to other customers with a higher interest rate, some of which goes back to the lender-customer. As such, both the financial institutions and the original lender-customer profit from the savings account.

Savings accounts generally require a minimum deposit of $100, though most banks allow for certain circumstances. Children can open savings account with $5. Savings accounts are also advantageous should the customer not plan on spending money for a few months. Whereas checking account pay less interest and may charge the customer bank fees for using the account, savings accounts generally have higher interest rates and do not penalize customers for failing to access the account in a given time.

Joint Savings Account

Joint savings accounts are established to benefit multiple individuals. Often, married couples establish these accounts to build financial security; other groups such as domestic partners, friends, and even minor children have joint accounts for short term projects or long term financial security. Joint savings accounts are less volatile than most other investments strategies, as their interest returns, though nominal, are consistent and secure. As such, these are good strategies for those who do not care for aggressive and risky forms of investing.

Joint savings accounts have other advantages too. If both parties on the account are employed, then they can apportion some of their wages to the account, which makes it easy to grow savings without the burden of manual deposits. Also, joint savings accounts can be very beneficial should an account holder dies. In this situation, the assets of the account will be available to the other account holder; otherwise, the assets would be frozen until the will specifies who receives what. Because the account will not be frozen, the surviving account holder will still have some, if not, full access to his funds, though this may depend on the jurisdiction. It is important the account holders understand the local rules that apply in addition to trusting their fellow account holders.

Finally, one can utilize joint savings account to fund checking accounts, which can prevent potential overdrafts should the account holder face an unexpected situation.

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