Savings accounts are among the various bank accounts you can open at banks and credit unions. Others include checking, Certificates of Deposits, IRAs, and brokerage accounts. A savings account is usually essential to help you save money for future use. Time has passed when people had to save money in their houses and offices as the funds were not secure in such environments. You can deposit cash in your account to save. But can people transfer money to savings account?
We shall see if others can send you money in your account. We all know about checking accounts that allow you to send and receive money any time of the day. Some checking account service providers allow you to manage your money online via a mobile app or bank’s website using a secure internet connection.
Even savings accounts are easily accessible online using your mobile phone or computer. That makes it easy to manage your funds on the go. Usually, when you open a savings account, you have a checking one that can sustain your daily expenditures. Savings accounts earn you some extra money on top of what you save, called interest.
And by the way, we have financial institutions which allow you to earn interest from your checking account when you maintain a certain balance. The interest rate is normally higher compared to what most savings accounts offer.
How to open a savings account?
If you want to open a savings account, then it is crucial to understand how you can go about it so that things can be easy. You can either open an account online or at a branch. You will need to fill out an application form and upload the necessary documents when you open one online. The process is faster since there is no lining up as it happens in branches.
When opening at a branch, you have to carry your original documents and photocopies and manually fill out the application form. The officers in charge may also take your biometric details and a passport size photo. The account may be ready that day or within a few days.
When opening your savings account, there are various things you need to present. They include the following.
- Social Security Number
- An identification documents
- An email address
- A phone number
- Physical address
If you are opening a savings account online, you may need to provide external bank details to fund your account. Online ones depend on debit, credit, and bank accounts to top them up. If you use your checking account from the same branch, you can send money with a checking account number instantly to the savings account. You require the savings account routing number if you send money from another bank or branch.
How does a savings account work?
The operation of a savings account is usually straightforward. You must first open an account, then deposit money. The amount you deposit earns interest per given time. Most financial companies normally calculate interest per annum, meaning that you get the interest in your account after every year.
Others calculate interest quarterly, whereby after every three months, they release your interest. Savings accounts have limitations on when you should withdraw your money. You usually get limitations on how many times you should withdraw money per month.
What are the factors to consider when opening a savings account?
There are various factors you should consider when opening a savings account. They include the following.
i) Interest rate
The aim of opening a savings account is to earn interest on the funds you save. The interest rates vary from one financial company to the other. If you find a savings account with a high rate, then the better.
ii) Fees
Some savings accounts charge monthly fees. You can also find others that charge annual fees. The fees can be draining if you save little amounts whose interest per year is below the deductions. It is good to check the one with a few fees.
iii) Online access
Since it is important to keep tracking the performance of your account, it is wise to open one from an institution that allows online access. That way, you will be able to know if there are any suspicious activities. Such platforms allow you to use mobile apps to put on alerts and notifications to receive updates. Viewing your balance now and then also gives you peace of mind.
iv) Minimum balance
We have financial companies which require account holders to maintain a minimum amount of money. The amount may be too high that it can be challenging to achieve. It is wise to check a savings account with a lower minimum balance requirement or the one that does not have any specific balance requirements.
Can you send money with a savings account?
Savings accounts allow you to transfer money to others. You can send money to a checking or savings account within your bank or another bank. For example, you can make an instant wire transfer with routing and account number from your account to another.
The sending of money can happen online or at physical branches. As I mentioned earlier, online money transfer is the most convenient since you can do it anywhere and anytime as long as you have a secure internet connection. You can also transfer funds at a branch, whereby you need to submit your details over the counter to get started.
Can people transfer money to savings account?
Yes, others can transfer money to your savings account since the account allows you to send and receive money in your account. When receiving money from someone in your branch, you must provide your account number and your full name. However, suppose you are receiving finances from another branch or bank. In that case, you will need to provide your account and routing numbers for the transfer to go through.
The possibility of accepting money in your checking account allows you to receive your salary from your employer, receive government benefits, and so on through direct deposit. You can also receive money from others when they send you checks. You need to fill out a deposit slip at your branch by filling in your account number and the check value and deposit the check for processing.
And by the way, people can send money anonymously to your savings account if, for example, your savings account is for your business. There are various ways people can do that. For example, if people pay for goods and services using a gift card at the point of sale, you will not know who they are since gift cards do not reveal the holder’s details.
It is also possible to receive money anonymously through platforms such as Cash App, PayPal, and Venmo if you provide your usernames to the public when asking for donations to cater to a particular issue. You then transfer the funds to your savings account.
How do savings and checking accounts differ?
Checking and savings accounts differ in various ways. They include the following.
- A savings account earns interest on the available balance. Most checking accounts do not earn interest. Those that allow you to earn interest require you to maintain a certain minimum balance.
- Checking accounts issue debit cards that allow you to access your balance using the card. On the other hand, only a few financial companies offer debit cards for savings accounts. You can use a debit card to withdraw cash at an ATM point. Also, you can transfer money from one card to another online.
- Savings accounts do not come with checks, while most checking accounts come with checkbooks so that you can write checks to make payments.
- Savings accounts have limited withdrawals per month, while checking accounts allow you to withdraw money as much as possible.
Is a savings account better than a checking account?
The two types of accounts are essential. It all depends on the purpose of opening your account. The savings one is good for savings purposes whereby you can save for the future. Therefore, if you open an account to save money, a savings account will be better.
On the other hand, a checking one will be better than a savings one if you want to open an account to deposit money for your day-to-day usage. That is because it allows you to access your money any time of the day.
How can you send money with a checking account?
As I mentioned earlier, a savings account allows you to send and receive money. You need to use the recipient’s account number to send money if the recipient is from the same branch as yours. The funds will reach their accounts immediately or within a few minutes.
However, if you are sending money to an account within another bank, you will enter the routing and account number and then make your transfer. You can transfer money to another bank using either a wire transfer or an ACH transfer.
One can send money from their bank account without verification if they link their bank account with a mobile wallet such as Apple Pay, Cash App, and PayPal.
Bottom line
A savings account is among the various bank accounts that allow you to deposit money for various purposes. It allows you to earn interest on the money saved quarterly or per annum. You can open a savings account online or at a branch.
The online account application is straightforward. You need to fill in details about yourself and upload the necessary documents right from your couch.
