Advantages of Opening a Savings Account

Opening a savings account is one way of safekeeping our hard-earned money. Saving up is favored by most people over an investment since it poses less risk. People tend to choose the safest course if they can't afford to lose even just a cent. Therefore, most middle-class earners would choose to set up a savings account than risk losing their money if a high-stakes investment doesn't turn out well.

Though investing your money could really help you with better financial gains, we can’t rule out the advantages of opening a savings account, especially when you are eyeing a good deal for an affordable house and lot. Also, securing a deal for a house and lot investment is one way to gain financially without the high risk.

Opening a Savings Account: Advantages

Savings accounts are being offered by banks and other financial institutions to consumers who want their money stored in a secured bank account. Setting up a savings account has its perks that appeal to a lot of money-saving enthusiasts. Aside from saving up for short-term and long-term financial goals, you can also set up another savings account exclusively for an emergency fund.

Not needless to say, savings accounts have their advantages and disadvantages, but let us first touch on the major pros to give you an extra push.

1. Helps establish your financial capability

A good credit standing is one of the advantages of having a savings account when you apply for a housing loan. It serves as a guarantee that you can pay for the house and lot that you will loan and that you expect the lender's office would approve. Your savings will vouch for your financial stability as well. Getting a good credit standing is like having a popular brand to establish your credibility or an impressive resume for a job interview. You can never go wrong with a savings account to get that nod for a good deal of quality yet affordable house and lot with a reliable real estate company such as Lumina Homes. 

2. It is convenient and accessible for online payments

Another advantage of opening a savings account is the convenience it offers. Some people prefer to purchase within their means, so they would not own a credit card. Even without a credit card, you can access your money anytime you need it if you have a savings account with an ATM card. Also, with the rising popularity of online banking and online purchases made available through apps and websites, having a savings account that you can directly access through these payment channels would provide ease than physically going to stores to make a purchase. This convenience is highlighted especially during a pandemic where paying cash and going to physical stores are risky. Even your purchase for a house and lot can be done through Lumina Homes Online. 

3. Savings accounts earn interest

Just by having your money securely stored in the bank, you can earn extra through savings account interest rates. Depending on the bank, your savings can grow from as low as 0.01 percent per annum up to 1 percent per annum. Savings accounts pay interest higher in digital banks, which range from 2 to 4 percent per annum. Indeed, having a savings account online or through traditional banks lets you earn interest money without doing any legwork. On top of that, it poses much lower risks compared to venturing into a high-risk investment type such as stocks, bonds, or mutual funds.

Opening a Savings Account: Disadvantages

In the Philippines, the major downside of savings accounts is the daily transaction limit enforced by Philippine banks. When withdrawing from a savings account, there can only be a certain amount that you can cash out for the entire day.

When using a savings account to make payments, it only allows the use of debit cards and over-the-counter transactions. But on a current account, for example, it allows the release of checks in addition to the use of debit cards and OTCs. Moreover, current accounts have few or zero limits when it comes to checks or withdrawals.

Money Market Accounts, Money Market Funds, and Checking Accounts

If you want more options and potentially better alternatives to a typical savings account, here's where a money market account comes to light.

MMA is a savings account type that could offer higher interest rates. At the same time, money market accounts impose minimum balance requirements that are higher than savings accounts.

In the Philippines, another way to grow your money in a short-term, low-risk investment is through a money market fund. These are short-term debt instruments that mature as early as 6 to 12 months, allowing you to yield passive income in a short amount of time. Money market funds are highly liquid as well, meaning it is easily convertible to cash.

One downside is that, while money market funds are generally low-risk, they are not insured by the Philippine Deposit Insurance Commission, unlike savings accounts and time deposits.

Another financial term that you might have come across with is a checking account. Also called a demand deposit account, checking accounts are non-interest-bearing peso accounts. Deposits can be made over the counter, while withdrawals come in the form of checks. Checking accounts are best used for the convenience of paying bills and your other daily transactional needs.

Trusted Banks to Set Up a Savings Account

In the United States, not all banks are insured or covered by the Federal Deposit Insurance Corporation (FDIC). In the Philippines, however, all banks, such as commercial, rural, mortgage, and savings banks, are mandated to be registered members of the Philippine Deposit Insurance Corporation. In the event of a bank closure due to an order by the Monetary Board, DPIC will preside and cover the insured money of the closed bank's depositors.

Speaking of banks, below are just some of the most trusted Philippine banks to set up a savings account.

1. Philippine National Bank (PNB)

The Philippine National Bank offers the best services for first-time savings account holders. If you are worried that you are not too familiar with banking transactions, PNB can also provide the easiest way to manage your finances. Their range of services intends to cater to newbies down to pensioners.

2. UCPB

UCPB is known to be on top of the list of providers of financial services and products. They cater to government institutions, private companies, and corporations. Regardless of whether your business ranges from small to large-scale, they have the capacity for financial support. This makes UCPB a reliable bank for savings.

3. UnionBank

UnionBank is best known for its convenience, speed, and security offers to all its clients. They even offer special features for a savings account, like enjoying a Visa debit card without a maintaining balance, which is the most common concern among account holders. They offer 24/7 access and even worldwide transactions with Visa ATMs.

4. ALLBank

AllBank has services that cater to various account holders depending on their financial needs. They offer specialized financing products that promise better returns, easily-accessible online banking services, and innovative customer support that are rooted in their goal to offer customer-responsive banking services.

5. RCBC

RCBC is known for its flexibility. They are open to discussing various services that would fit your personal preferences and even your spending capacity. If you can't afford to shell out too much to open a savings account, RCBC can offer services that match your financial capacity and your lifestyle. Since these two can affect how you manage your money, they must help their clients enjoy their hard-earned money while setting aside more for safekeeping.

Opening a savings account is just the first step in moving towards better financial investments. Start with a savings account to secure your dream of owning a house and lot, then seek your bank's advice for better means to invest and make your money work for you.

Make Smart Use of your Savings in an Affordable House and Lot with Lumina Homes

Since property values appreciate over time, a real estate investment is generally considered a low-risk investment type. If you plan to invest in an affordable house and lot for sale, Lumina Homes offers quality yet affordable housing options to cater to your lifestyle needs.

Whichever financial institution you will opt to help you fund your dream house, Lumina Homes guarantees to assist you properly in order to give you a smooth-sailing homebuying journey. Do not hesitate to drop your real estate inquiries in our inbox today and get the chance to seal your dream house and lot in the Philippines very soon!