Savings accounts offer clients simple and efficient ways of keeping their money safe. They also have a number of benefits, such as offering transacting facilities for clients. Some savings accounts offer interest earning opportunities for clients.
While there are a number of advantages offered by bank accounts, there are also some disadvantages of using savings accounts.
Low interest rates
Saving money in bank accounts may come with the disadvantage of low interest rates. So, by using savings accounts instead of investing your money you could earn less interest. Savings account interest rates are significantly lower and offer fewer options in terms of earning more on your money.
Only insured up to a certain amount
While savings accounts are safe places for storing money, financial institutions also only provide insurance up to certain amounts. So if you are a victim of a phishing scam and your account is hacked into, the financial institution may not always provide cover for the full amount.
Can tempt you to spend your money
Using a savings account means that your money is easily accessible. Unlike using a fixed deposit as an investment tool, one of the disadvantages of using savings accounts means that you may be easily tempted to spend your money, which would defeat the purpose of storing it away in the account. Using this account means that you need to be disciplined enough to avoid dipping into your savings regularly.
There may be withdrawal limitations
Savings accounts often have daily withdrawal limits, so you may not always have access to the cash when you need it.
There could be minimum balance requirements
You may be required to maintain a minimum balance in the account; otherwise you may incur additional charges.
Bank fees may be quite high
Banking institutions may charge high fees for use of their facilities.