High Interest Rate Savings Accounts: The Sure Investment

2007-03-08 10:33:40

( Financial )



High interest rate savings accounts are offered by banks to encourage more people to open and maintain an account with them.

THE DRIVING FORCE OF THE BANKING SYSTEM

Banks use your high interest rate savings accounts to fund their lending business. The money you infuse into their system is the money given to those who have applied and have been approved for bank loans. If you are both saving and borrowing in the same bank, your high interest rate savings accounts may very well be the source of loans too.

While banks are considered savings institutions, their main sources of revenues come from their lending business. They earn through the interest rates they charge in return for the loans they provide the market.

The business of banks is premised on a very simple principle – use someone else’s assets as capital to grow their own business. In reality, banks are also borrowers; they borrow your savings account and pay you back in the form of savings interest rates.

Thus banks design high interest rate savings accounts in order to get more capital and generate more revenues. The system is independent and self-perpetuating. As long as there is money to be saved, there is money to be borrowed.

SIMPLE AND STRAIGHTFORWARD

Indeed there are many ways to make your money grow, but opting for high interest rate savings accounts is the surest and simplest way to do so. While you can earn more by investing in a business or the stock market, the risk of losing money is very possible as well. Moreover, opening a business or investing in stocks requires you to constantly monitor and supervise your investment, which can be very time-consuming and inconvenient.

It may be true that the returns on high interest rate savings accounts are not high enough compared with other investment options, the security and simplicity of this method more than makes up for it.


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