Four Benefits of Automated Savings and Banks With the Best Rates
When it comes to personal finances, most people really start to freak out. They wonder how they are supposed to turn their $40,000 or $50,000 per year paycheck into wealth by the time they are of retirement age. The reason for this is typically the result of them being afraid to risk their money in investments. However, what people fail to realize is that anytime people lose money in investments, they still almost always come out ahead in the amount they gain. One particular investment option, which includes zero risk, is a savings account. The bad thing, however, is the fact that most people do not even hassle with putting their money in savings because they do not believe the lower interest rates are worth it.
If someone has decided that they would like to start a savings account, they may find that it is a little difficult to gain enough courage to save money instead of putting it away in the bank. Sure, human nature makes everyone feel like they are entitled to royal treatment after working hard all week at their job, but any wealthy person has made the sacrifice of investing money they could have blown. Opening an automated savings account can make the thought of saving over disappearing a little easier to take for many people. In addition, investors will never have to worry about forgetting to add to their account each month.
Let’s face it, people today have very busy schedules. Whether someone is balancing two, full-time jobs, or a person who has kids at home, it seems that many people do not have much time left to themselves. When they do have a little free time, they likely do not want to have to worry about their investments or their work. With an automated savings plan; however, people will never even think about taking the time out of their day to make this month’s deposit.
Minimize Chance for Error
Another nice thing about automated savings is that accountholders will not have nearly as high of a chance to make errors. Making manual deposits can easily lead to numbers being transposed, such as planning to deposit $234 per month and accidentally making a deposit for $432 or something similar. Whether they deposit more or less than they attended, it can lead to quite a bit of panic. Additionally, people will never have to forget to record the transaction because they will already know what the amount is and what day of the month the deposit is officially recorded.
Change of Perspective
Finally, automated savings can change an investor’s perspective. Rather than thinking about how they would really like to buy the truck they would like to have but do not need, they will now not even realize they are saving the money. There is actually some pretty detailed consumer-behavior research on the theory that people feel a little more “pain” when they write a check or something or pay cash instead of using a credit card. Perhaps, some people cannot stand to write out a check that is 10% of their paycheck, which will go directly to their savings account. Seeing figures on paper can cause a lot of people to almost feel depressed over the fact that even the $300 per month they deposit in savings could have been used on something a lot more enjoyable today.
At one time, most banks only offered manual deposits for savings accounts, but today, many banks offer automated savings. Local banks may not offer this convenience service, but practically all of the banks at more of a corporate level certainly do. In regards to interest rates, automated savings accounts typically pay a little better than traditional savings. The simple reason for this is the fact that the bank knows they are going to have that money secured to issue additional loans with on a monthly basis. However, some banks require a minimal amount to be deposited per month in order to receive the additional services that are included. For example, Sun Trust has a program where if their accountholders agree to have at least $25 automatically deposited to their savings account on a monthly basis, they will receive overdraft protection for free. Rather than promising a better interest rate or overdraft protection, US Bank has changed up their strategy a bit by deciding to offer a $50 rewards card to those who open one of these accounts if it has at least a $1,000 balance. To promote responsibility with investing, US Bank has also agreed to issuing a second $50 rewards card to their same customer if they are able to keep at least the $1,000 balance in their account for a full year.