All what you need to know about bank accounts & Saving

What is a bank account?

A bank account is what keeps your money safe with the bank, and its main objective is to save and invest your money.

What are the benefits of opening a bank account?

  1. Security: keeping your money at the bank secures it and prevents it from getting lost or stolen.
  2. Accessibility: you can use, deposit, and withdraw your money from your bank account at any given time through the bank’s various channels (i.e. ATMs, Online Banking, Mobile Banking app, etc.).
  3. Investment: certain bank accounts offer interests on the total amount of money kept; that’s how you grow your money effortlessly.

What are the types of bank accounts?

There are many types of bank accounts available for individuals, and the names and types of these accounts are different from one bank to another, but the majority of these accounts fall under two main categories:

  1. Current Account
  2. Savings Account.

What is the difference between current accounts and savings accounts?

  1. Current Account:
  2. A current bank account does not offer any interest for its account holder however; it allows its account holder to perform many traditional banking operations (i.e. issuing debit cards, issuing checkbooks, receiving paychecks, etc.).

    • How can you keep track of all your current account’s transactions? Through bank statements or online banking.
    • Do I have to ask for a bank statement to receive one? The bank sends each of its clients their bank statements periodically, but you can request a bank statement whenever you want.

  3. Savings Accounts:
  4. A savings bank account offers interest for its holder on the total balance deposited into the account. The interest is not fixed; it differs from one account to another, one bank to another, and according to the total deposited amount (for certain accounts).

    • How can I calculate the interest? The method of calculating the interest varies according to the interest payment frequency, as it can be calculated daily, monthly, or quarterly.
    • What is the main purpose of Savings Accounts? To save or to achieve short-term investment plans. Savings accounts have common factors as current accounts; they’re both available 24/7 in terms of accessibility, cash withdrawals, cash deposits, and debit cards and checkbooks issuing (for certain accounts).

    Additionally, you can also monitor your transactions through bank statements and online banking.

    Note: bank statements are also sent periodically by the bank, and can also be attained anytime through electronic banking services (i.e. internet banking/mobile banking, or phone banking).

What is the bank account’s interest?

It is the amount of money earned for keeping our money in your bank account (for certain bank accounts).

  • How is it calculated? The percentage of the interest is calculated based on the amount of money deposited, but as previously mentioned, the percentage differs from one account to another and from a bank to another.

Other ways to save our money with the bank:

  1. Term Deposit
  2. An account where you deposit an amount of money into the bank for a specific period of time at the bank’s disposal, and in return, the beholder attains interest.

    • What’s the duration of a term deposit? The deposit period starts from 1 week up to 3 years.
    • Can’t I withdraw the amount or part of it before the due date? You can, but you’ll be charged the prepayment fees and you may not receive the profits.
    • What is a term deposit’s minimum amount? It differs from a bank to another.
    • Do term deposits have other names? Yes, fixed deposit account, term deposit, or investment deposit.

  3. Certificates of Deposit
  4. Like term deposits, you deposit an amount of money into the bank for a specific period of time at the bank’s disposal and attain interest in return. However, the deposit period of those certificates starts from 3 years up to 10 years.

    • Can’t I withdraw the amount or part of it before the due date? Again, you can after a specified period from certificate issuance date & according to certificate terms & conditions but –just like term, deposits- you’ll be charged the prepayment fees and you may not receive the profits.
    • Note: certificates of deposit require a minimum deposit amount as well, but it differs from one bank to another.

Coming down to the key question, how do you choose the best saving tool for your case?

As you may have noticed, the main difference between all the above saving tools is the time factor and interest rate. Therefore, choosing the best saving product mainly depends on your needs and saving capability; the longer you keep your money, the higher interest you earn (you get to choose if you want your interest daily, monthly, or quarterly). So we’ll break it down to 3 scenarios:

  1. If you can leave your money untouched for a few days or even months, then a savings account is the best choice for you.
  2. If you can leave your money even longer for 1 month and up to 3 years, then the term deposit is the best option to opt for.
  3. If you can leave your money from 3 to 10 years, then the certificate of deposit is definitely what you should go for.

Accounts Terminologies:

  • Interest Rate: the amount of money added to the account (profit).
  • Account Opening Fees: the fees charged when you first open an account.
  • Maintenance Fees: the account’s monthly fees (charged for the service itself).
  • Bank Statement: the statement that includes all the transactions and the account balance.
  • Checkbook: a booklet used to pay people through cheques.
  • Authorized signatory: the customer’s signature on the account opening form (must be the one used for all future banking transactions).