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Should You Open A Savings Account In 2020? Take Our Quiz And Learn How Savings Accounts Work

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Should You Open A Savings Account In 2020? Take Our Quiz And Learn How Savings Accounts Work

Looking to learn more about savings accounts and their ability to help you meet your financial goals? You’re in the right place.

We at Benzinga believe it’s important to be pragmatic when it comes to finding ways to make your money work for you. Before exploring what new savings account is best for you, put your knowledge of savings accounts to the test with our quiz below!

Afterward, our team of experts will give you more information on how savings accounts work and help you decide if you should open a savings account in 2020.

With a savings account, which of the following is possible?

A. A savings account can help create a financial safety net
B. A savings account allows you to earn interest on initial and recurring deposits
C. A savings account can help you save for your next vacation
D. A savings account can help build and sustain savings habits
E. All of the above

(E.) All of the above are possible when utilizing a savings account. Because money placed in savings accounts is “out of sight, out of mind,” it’s important to set aside a fixed amount of money each month for your account.

Money put into a savings account can experience accelerated growth thanks to…

A. Usury Rates
B. Direct Deposit
C. Compound interest
D. The FDIC

(C.) Compound interest is interest earned on both the principal and any accrued interest.

Earnings from compound interest are added to the principal balance, allowing you to experience accelerated growth on your money.

Which type of account would be the best for everyday spending?

A. Savings account
B. Checking account
C. Money Market account
D. Brokerage account

(B.) In general, checking accounts allow an unlimited number of transactions, including from debit cards and physical checks. The majority of checking accounts do not accrue interest. Savings accounts, on the other hand, are made for long-term savings and building interest.

True or False: Saving and investment are both viable strategies to meet your long-term financial goals.

True
False

(False.) Due to low interest rates commonly found in savings accounts, relying on savings accounts alone for your long-term financial goals provides little protection from inflation.

True or False: Both investment accounts and savings accounts are Federal Deposit Incorporation (FDIC) insured.

True
False

(False.) Investments are not protected by the FDIC. The FDIC provides standard deposit insurance of $250,000 per depositor, per insured bank, for each account ownership category.

So, how did you do? If you’re unfamiliar with how savings accounts work, the following are the basics from our Benzinga savings account experts.

How Do Savings Accounts Work?

A savings account is a basic bank account held at a financial institution.

The account holder can make regular deposits while the account accrues a moderate interest rate, usually between 0.01%-1.5% per year.

While funds may be accessible through wire transfers and ATM withdrawals, account holders must limit certain types of withdrawals due to federal regulations.

At the end of the day, compared to other savings vehicles, savings accounts will allow you to receive an intermediate interest rate with moderate access to your funds.

Also important because savings accounts aren't for everyday transactions, funds are normally less accessible. Many savings accounts don't come with an ATM card and are limited in certain types of withdrawals per month.

Should I Open A Savings Account In 2020?

Opening a savings account is a great idea if you’re looking to earn money while maintaining relatively easy access to your funds. Your savings account can do more than receive deposits and fund purchases.

You can find savings accounts with benefits like free ATM fees, low or no account fees and even the option to earn interest on your checking account balance.

Ready to find an account that can do more? Start with Benzinga’s list of the best places to open a savings account in 2020 for the rundown on the unique benefits available now.

 

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