What is a high savings interest account?
You have to know the basic details about high savings interest accounts before you invest in one. Though they are one of the most popular schemes to save money, they have their own benefits and drawbacks. The savings accounts generally have an interest rate of around 5% at the highest. If you are investing in a high savings interest account then you may be able to get an interest rate of up to 7%. It is an intelligent way to increase your savings and achieve your financial goals.
Step 1
How is the interest calculated?
The nature of the account and the calculation of the interest may vary depending on the country, the bank and the account. Some banks calculate the interest on a monthly basis. On the other hand there are banks that calculate interest on a quarterly and yearly basis.
Step 2
Some banks might charge a small fee for high savings interest account. There are other banks too who do not have a fee attached to such accounts. You will have to ask the bank about how the interest on your high saving interest account is calculated.
Step 3
What are the major benefits of the high savings interest account?
The main benefit of high savings interest account is, as the name suggests, the high interest rate. You can make your money grow at a faster rate. In a normal savings account the interest rate will be much lower and so the increase in the amount will be negligible. There are many other benefits also.
Step 4
One of the main benefits, of having a high savings interest account, is that you will have access to privileged banking zone. Most banks provide their customers with a dedicated relationship manager. This step ensures a more personalised and swift service. The customers will also receive an international Debit card with insurance coverage.
Step 5
This is a definite positive point. Some banks also have the facility to link your high savings interest account with your Current account. You will also have higher withdrawal limits, which will be very helpful during shopping sprees. You can also get daily account balance alerts on your mobile or in your mail.
What are the drawbacks of this type of accounts?
One of the drawbacks is that the high savings interest account has a higher limit of minimum balance. If your normal savings account has a minimum balance limit of 5000, you may have to maintain a minimum balance of 10,000 in your high savings interest account. The customer has to be careful to see that he does not fall below this limit or else he could be penalised. The initial deposit amount will also be higher for these accounts. This means that only those who can afford to put in large amounts of money can avail the benefits of this type of account.
Another problem associated with high savings interest account is the time taken for transfers. Transferring money from such accounts to other accounts usually takes a much longer time than normal transfers. This could be a major drawback for businessmen or busy individuals who need the transfers to be done instantly. Many people are of the opinion that the interest rate of the high savings interest account is not high. They feel that even to do justice to the name the interest rate should be higher.
