6 Reasons You Should Have a Savings Account
A savings account might not seem important when first setting up your finances.For those worried about paying bills or paying down credit card debt, saving isn’t always a priority. However, having a place to stash cash is a critical part of financial wellness.
According to the FDIC, the current national interest rate on savings accounts sits at an average of 0.06% Annual Percentage Yield. This percentage may not feel impressive, but a having high yield savings account isn’t the sole reason for having one. Savings accounts are a safe way to steadily build wealth, allowing you to watch your money grow and not dwindle when you make purchases.
Angel Acosta, branch manager of SouthState’s Tampa Midtown branch, outlines a few more reasons to consider opening a savings account.
Stay Motivated and Track Your SavingsDo you want to purchase a new car, save for college courses, or go on a nice vacation next summer? Having a dedicated place to save money can help you stay motivated when trying to save for the first time or save a large amount.
Putting money aside in a specific account allows you to track how much progress you’ve made on a savings goal.
Banks also offer automation to grow your savings for those busy and forgetful folks. With SouthState’s Round Up to Save™1, every time you make a purchase with your debit card, the total is rounded up to the next dollar with the difference transferred to a savings account.2 Plus, SouthState will match 2% of those savings at the end of the year, up to $250.3
Build an Emergency FundOpening a savings account for an emergency fund helps you prepare for life’s unexpected moments.
Emergency funds are important for any size emergency. Having your own money available to cover an expense, instead of having to use a high-interest credit card or take a loan with interest, gives peace of mind and saves you from paying interest.
An emergency fund should have 3 to 6 months’ worth of expenses, especially to cover gaps in employment. You’ll want to total your utility bills, entertainment costs, food expenses and housing costs, just to name a few.
Another note about emergency funds: define what emergency means to you or your family. Will you dip into your emergency fund for only things like car repairs or do concert tickets also fit the bill?
Save for Medical ExpensesThe high cost of a hospital stay or prescription drugs can severely impact your financials. Whether your family has a history of illness or not, you can open a savings account with the primary goal of saving money for medical bills.
There is another savings option to help you cover medical expenses – a health savings account, or HSA. A health savings account allows those with a high-deductible health plan (HDHP) to pay for qualifying medical expenses like prescriptions, co-pays, dental care, eye care and more. When a medical bill is due, you can access your HSA funds whenever you need them.
You will contribute to your HSA like other savings accounts. At SouthState, you can earn interest, and contributions roll over annually.
Security for Your MoneyHiding money in your mattress seems fun if you want to count your cash, but it does not offer the security you need. Cash left under the bed is vulnerable to being stolen, damaged or destroyed and without the correct insurance coverage, the loss may not be recoverable. Money deposited into a savings account, however, is not vulnerable to those types of risk.
When using an FDIC-insured bank, funds are insured for each account ownership category up to $250,000 per depositor if the bank fails.
Ease of AccessSavings accounts allow for easy access to your money while you’re building it. You can remove funds to make a down payment on a house, put down a deposit on a vacation rental or withdraw what you’ve saved up for another larger purchase. Ease of access is also important when you need money for a medical bill or other emergency situation.
When shopping around for a savings account, whether a money market account or personal savings account, check to see if your bank has a limit on the number of transfers or withdrawals per month.
Teach Your Children to SaveIt’s never too early to begin teaching your children the basics of money, spending and saving. According to a study of low-income families conducted by the U.S. Government Accountability Office, families with children enrolled in a Children's Savings Account program saved four times the amount of their own money, on average, than families who were not enrolled.
Contributing to a CSA may also increase families’ educational expectations for their children. The government study found that parents were twice as likely to expect their student to attend college or other higher education., though long-term effects are limited.
While SouthState doesn’t offer a CSA, we do offer a youth savings account so your child can have a bank account all their own. Setting aside just a few dollars can put your them on the path to a healthy relationship with their money.
Open a savings account online today or continue your application.
- The Round Up to Save™ service is available for personal accounts only; Health Savings and Money Market accounts are ineligible. Round Up to Save™ is a trademark of SouthState Corporation.
- Does not apply to recurring debit card transactions.
- Credited to your savings account annually on the first business day of January. To receive the matching funds, checking and savings accounts must be open, in good standing and enrolled in the Round Up to Save Program at the time the matching funds are credited.