Bank Accounts in the Philippines and their Uses
26 August 2022Having a secure location to store our money is the major function of banks in the lives of their customers with all deposit accounts insured by the Philippine Deposit Insurance Corporation up to Php 500, 000. In addition, they also provide deposit accounts that are both secure and profitable since account holders get interest payments on a regular basis. As a point in fact, interest rates on bank deposits nowadays vary from one kind of deposit account to another.
There are many distinct banking products from which you may choose while creating an account. Make sure you know the distinctions between the most prevalent kinds of bank accounts in the Philippines before making such a major choice.
You may choose the best kind of account for you knowing your reasons for opening a bank account.
Type of Bank Account in Philippines
Deposit accounts are the most common kind of bank account in the Philippines, and they provide consumers a safe place to hold money for spending or saving, as well as a means to organize and monitor their finances.
1. Savings Account
As a result of the low initial deposit and minimum maintaining balance, savings accounts are often the first kind of bank account opened by Filipinos. In the Philippines, you may start a savings account with as little as Php 100 and keep the minimum required balance of only Php 2, 000. This is why a savings account is so useful for people of all ages who aren't yet earning a steady living wage. You can choose whether to have a passbook savings account (also called regular savings accounts) or an ATM savings account. When you open a savings account, you can also use its online banking services for a more convenient banking experience.
Low Points:
Unfortunately, savings account interest rates are low, often hovering around 1% per year or less. If your account balance drops below the minimum amount necessary to keep your account open for more than 30 days, the bank will assess a penalty cost of Php 200 to Php 500.
When you use an ATM from a different bank to see your account balance or withdraw cash, they will charge you a fee for using their machine. There are also daily and per-transaction restrictions set by banks.
Recommendations: The best location to save your savings, spare change, or emergency fund is in a savings account. You can make deposits of cash and checks and withdraw cash and checks, but you can't write checks out of this account.
2. Checking Account
A checking account provides access to checking services in addition to having most of the benefits given by a regular savings account. Debit cards are a standard issue with modern checking accounts, making it easier than ever for account users to access their money whenever they need it. The limitations on withdrawals and expenditures from a checking account are more flexible than those of a standard savings account.
Low Points:
Paying with a paper check is becoming an increasingly archaic practice as more people opt for more convenient and modern electronic alternatives. However, they are still widely used in the Philippines up to these days.
Recommendations: A personal loan, car loan, or mortgage loan that needs repayment through post-dated checks is a good reason to have a checking account. If you're going to have one, you may as well put all your routine transactions on it, including paying rent, bills, and tuition, or keeping track of your business's costs.
This type of account is essential when you avail yourself of an affordable house and lot for sale from Lumina Homes through a bank home loan. Lumina Homes is offering flexible payment schemes to its homebuyers to ease the burden of buying their dream home. They have the option to apply for a bank home loan or in-house financing depending on their budget, lifestyle, and family's needs.
3. Time Deposit Account
Funds placed in a time deposit account are guaranteed to remain there for a certain amount of time, often between one month and seven years. Your funds will be unavailable until the specified time has passed. The Philippines provide competitive interest rates for time deposits ranging from 1% up to 3.50%. The interest you earn on a bank account depends on both the quantity of your deposit and the length of time you want to keep it there.
Low Points:
It's possible to cash out early, but you may lose all of your earnings in the process. Your money is invested and loaned out by the bank. You'll get more money in interest when the account matures.
Recommendations: Unlike savings accounts, a time deposit account is a safer investment in terms of interest. For those looking for a safe place to put money that they won't need for a while, such first-time or cautious investors, a time deposit is an excellent option.
4. Dollar Account and Other Foreign Currency Accounts
You may choose to cash out in either pesos or dollars, depending on which currency exchange rate is most favorable in a foreign currency deposits account. You should diversify your investments by opening dollar bank accounts which in return can be good for your financial portfolio.
Recommendations: A foreign currency account makes more sense than a peso account if you often deal in US Dollars or any other non-local currency because of the added convenience of not having to visit a money changer that is why these type of bank accounts is recommended to OFWs and their families, frequent travelers, entrepreneurs dealing with international clients or transactions, and anyone who earn foreign currencies.
5. Joint Account
All three types of bank accounts (savings, checking, and time deposits) are eligible to be held under a joint name. They are either "joint and" or "joint or" accounts. Withdrawals from a combined "and" account need the signature of both account holders. In contrast, account holders with shared "or" access may take money out of the account at any moment without the other owner's permission.
If you have a "and" account, you will only get a passbook (no ATM card), however, if you have a "or" account, you will have access to an ATM.
Recommendations: A joint account is a kind of financial account used by two or more people, most typically business partners, organizations, and couples, to manage their combined income and spending.
Whichever savings accounts in the Philippines you choose, one thing is for sure: this can help you in your future investments and this includes affordable house and lot Philippines investment with Lumina Homes!
So start opening an account now with your chosen financial institutions and begin your affordable house and lot for sale buying journey in one of the most profitable and safest form of investments in the country. For more tips about how to earn passive income through home investment, you can read our other featured blogs on this website.
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