In the days of old, the money that was kept in a savings account used to grow. These days, the combination of increasing bank fees and lower interest rates have made savings accounts a less attractive place to put extra cash. Whether savings accounts are worth it really depends on what type and how much money is deposited.

High-yield savings accounts can definitely be worth it because they earn more interest than accounts offered by the average bank. However, even these have lowered their rates over the past few years. They often incent people to join by making an initial deposit of $25 or so but that only goes so far to make a person feel better about earning $1.00 in interest each quarter.

If someone has only one or two hundred dollars to place into a savings account, odds are that they will face a service charge from a brick and mortar bank. Financial institutions cannot afford servicing such accounts. However, there is a benefit to keeping the money separate from a checking account- it discourages you from spending it.

Individuals who have a lot of extra cash on hand see results from putting some of it into a savings account. Free money is free money, no matter how you look at it so placing the money in an interest-bearing account is better than keeping it under the mattress. However, there are also other places that the money can be invested, such as an interest-bearing certificate of deposit.

It is recommended that people have six months of living expenses available at all times in their emergency fund. This emergency fund will come in handy if a person is laid off or faces emergency expenses like home or auto repairs or healthcare costs. Since this money should be housed somewhere it can be immediately accessed, a savings account is the perfect place.

Keep learning more:

1. Government Bonds 101: Introduction to US Treasury Bills


2. The Advantages of Investing in Bonds


3. The Advantages of Investing in Mutual Funds


4. Why Everyone Needs Cash


5. Do Not Put All Your Money In Stocks


6. Inflation is the Biggest Risk of Bond Investing


7. The 3 Basic Types of Mutual Funds

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