Bank Savings Rate

2007-03-08 10:33:40

( Financial )



Bank Savings Rate
The bank savings rate is basically the interest per annum that a bank will pay you for the deposits you have with it. This rate is usually very low; one percent is the norm in many countries. This one percent is also still subject to taxes, and so in reality, the amount is less than one percent.

Savings Account Rates versus Mutual Funds
The bank savings rate will always be lower than the interest rates offered by investments. Some of the less risky investments available to consumers are treasury bills, and mutual funds. Treasury bills are almost risk-free, as they are guaranteed by the government. Rates for treasury bills vary; some countries offer 6 percent, others offer rates as high as nine percent. Mutual funds are basically funds pooled by individuals so that they are able to be invested by an expert. These funds normally grow steadily, and provide good interest rates ranging from 6 to ten percent, and even higher, depending on the performance of the fund.

Why Is the Bank Savings Rate so Low?
The bank savings rate is usually very low because of bank expenses and the nature of the agreement with the bank. A savings account involves a contract of deposit, and a deposit's main concern is always safe-keeping, not growth of money. This is why the bank is not going to offer very high rates; the goal of a savings account is to keep your money safe. Savings account interest rates will never be very high.

High Interest Rate Savings
High interest rate savings accounts may be available, depending on the bank you do business with. If a bank offers high interest rate savings accounts, be sure to question them if the funds you deposit are exposed to any risks. A bank savings rate is usually low because the money is never exposed to great risk. Any self-respecting bank will notify you of any risks that your money will be exposed to.


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