High Interest Account: The Strict Savings Account

2007-03-08 10:33:40

( Financial )



PAYING YOU IN INTEREST

Why would banks pay high interest in the money that you keep in them?
Banks pay you high interest because the money you keep in the bank is the money these banks use to fund their lending business. Offering a high interest account is their way of encouraging more households to open a savings account.

Opening a high interest account calls for some rules that must be followed to the letter if your account is to earn the high interest that it is supposed to. First, a high interest savings account requires a relatively high initial deposit. This initial deposit may vary greatly from bank to bank so make sure to ask around.

BASIC RULES AND GUIDELINES

A high interest account also requires that an average maintaining balance must be kept every month. This means that your savings account must have a specified accrued monthly balance which your high interest account cannot go lower than. If this happens, not only will you lose the high interest you were supposed to have earned, the bank will also deduct penalties from your account as well. So make sure that you can maintain the required balance before opening a high interest account.

A high interest account also sets limits on the number of withdrawals you can take against your savings. Usually the allocated withdrawal is from three to five a month. If you go beyond this you will again be penalized. This goes true for issuing checks against the account. The check is considered a withdrawal so it is counted against your allocation.

All of these rules apply to a high interest account in varying degrees, depending on the bank. If you follow them and make regular deposits into your account, you can be sure that after some time, you will have a hefty sum at your disposal.


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