Getting control of your finances is possible with the help of a savings account. This has been the universal way to optimize large chunks of cash that has nowhere to go. But a savings account isn’t an all in one option for every consumer. A fixed deposit account is a strong alternative and may be your best choice to get higher returns.

Savings

A savings account is often seen as a ‘rainy day’ fund. But it is much more than that and remains one of the most flexible investment options offered by banks. Most banks offer a savings account, with Credit Unions leading the way when it comes to the best interest. Over time, popular banks and online banks have shown massive potential when it comes to overall features – some have even managed to lead the industry with their interest rates.

The overall features matter when it comes to a savings account, and it is the main reason an individual would choose it over fixed deposit accounts. With a savings account, you face little to no penalties when withdrawing money. In an emergency, it can be a big deal to know that you have an extra source of income to pull from when needed.

With a fixed deposit account, pulling out money will cause heavy penalties. The account is meant to be a ‘set it and forget it option’, so interrupting the process while it’s maturing goes against its very reason to exist. When choosing a savings account provider, look at more than just the interest earned. A savings account is about flexibility, which is something that many big money investments lack.

Fixed Deposit

Individuals that skip a savings account and go for fixed deposit have a completely different set of financial needs. You get a much higher interest rate on your deposit amount, and it grows at a rate that even the best savings account can’t match. The key here is that there is a cap, whereas with a savings account there is usually no cap.

Fixed deposit accounts can be set up as short or long-term investments depending on your chosen institution. Longer tenures offer the better return, but that is only a small slice of the features. With a fixed deposit account, you can avail of a loan against your principal amount. This is done to counteract penalties that would incur if you needed to take money out of an active fixed deposit account. Up to 90% of the principal amount is a possibility in this situation and varies by bank.

Individuals that are disciplined with financial matters benefit the most from a fixed deposit account. It’s an investment that requires envisioning a goal and seeing it through to the very end.

Wrap Up

Explore all of the features of a savings or fixed deposit account. They are the two main options, but in truth they offer unlimited financial possibilities. As long as your personal needs match up, any account will be an important part of your success.