Money deposited in a savings account is only intended to stay in the bank for a relatively shorter time span. This account usually offers much lower interest rates than most bank accounts. But still, like many other accounts, it accumulates interests. The rate of which is largely dependent on the conditions provided by the bank.
Savings accounts are normally maintained by commercial banks, credit unions, loans and savings associations, and some mutual savings bank that are offering interests that can never be used as money. However, the account may be utilized by writing a check.
These accounts allow customers to use parts of their liquid assets, which may be used for any transactions. But before a savings account is used, the balances in the savings account must first be transferred to checkable deposits or transaction deposits or currency. But due to the simplicity of transferring the saving accounts, they are often termed as "money".
Though the use of checks is often not allowed, withdrawals are still easier when done using the savings accounts. The Money Market Deposit Account or the MMDAs on the other hand may restrict you on a limited number of transference of accounts and withdrawals.
With the advent of the Internet comes the development of a new system of banking- the direct-to-consumer banking system. This particularly addresses online savings accounts. Direct-to-consumer system allows direct access to savings accounts from the traditional bank online where money naturally transfers by means of electronic bank transfer. There are two types of banking institutions that create and allow this form of transaction- online-only banks and the traditional banks.
Online-only banking is the answer of the entrepreneurs to the growing consensus of the general public of who usually make banking transactions through the internet. These banks tried to accomplish what real banks have done. They offered almost the same spectrum of products that traditional banks have but offered them on consumer-friendly deals- high interest rates and low fees.
Online savings accounts often offer significantly higher rates of interest as compared to the contemporary savings account. This deal may be attributed to the fact that lesser expenses during online processing and that online market is naturally rate-sensitive.
Sadly, the majority of the consumers are not yet prepared to this new treatment in banking. This in effect, brought down most of such banks.
But by the end of year 2000, ING launched an optimized form of online-only banking. This was rather successful and brought great increase in the online banking industry. They created a much simpler savings account transaction that pays higher rates than the traditional banking. But this does not permit the use of ATM cards, checks, and other services. It was only intended as an account for which your money may be safely guarded.
For almost three years, ING had no other rivals in this system of banking. But recently, many other banking institutions have followed suit. Some were the pioneers of the online-only banking who eventually died down during the course yet returned to beat the market share ING has. Some of these banks offer the same services with that of the ING programs. Most have the same principle of high interest rates and no unnecessary frills.
One notable new entrant is the VirtualBank. This targeted the high-end techy society yet they offer much lower rates as compared to the ING Bank. Thus they gained some consumers.
Eventually, the industry expanded sometime in 2003 until 2004. And by the year 2005, savings account virtually revolutionized banking by means of online-only banking.
Robert Thatcher is a freelance publisher based in Cupertino, California. He publishes articles and reports in various ezines and provides savings accounts resources on http://www.your-saving-account.info.
Article Source: ezinearticles.comIt’s easy to be put off by the idea of online banking. Worries over whether it’s really secure or not, remembering all those complicated passwords, and wondering how to manage a complicated interface are all concerns that people have; people who haven’t taken the plunge that is.
Oddly, for an Internet professional I was in this camp myself until recently when I remembered that I hadn’t paid a bill late at night and couldn’t get to the bank in time to pay it before incurring any charges.
I hate paying for things I don’t have to so that simple act of forgetfulness made me start looking a bit more seriously about whether or not online banking was actually going to work for me.
So I went over to the online banking section of my banks web site and took a look. Filling in the application form was relatively straight forward and only asked me for the kind of information you can get without having to rummage around through boxes of old paperwork, which was a pleasant surprise.
A couple of days later a letter arrived telling me I had to activate the account and enter a special code to get things going (I’d already saved another special number from the application stage). Back to the computer then to activate the account.
After a couple of minutes following the instructions I’m suddenly plunged headlong into the world of online banking. I can see my statement whenever I like, I can pay bills night or day and just generally manage my account when I want to, not just when the bank’s open.
This is an exciting new world and I’m loathe to log out for fear that I’ll never be able to get back in again, but eventually I do and get on with the busy of earning money rather than just watching where it’s all going.
The next evening I decide to give it another go and am surprised by how simple it is to get back in (having memorised a couple of important passwords of course), and I can see that the bills I paid last night are all cleared and on my statement.
Now of course I’m a convert and regularly turn up at my bank in my slippers at 11pm to be greeted with a warm welcome and a range of online services that I wouldn’t have dreamed possible before I’d actually tried it.
And the best thing of course, no more interest charges when I’m a little more forgetful with bills than I really should be. So, if you’re still worried about whether online banking is worth the hassle, you should give it a try. It’s not nearly as complicated as you think it’s going to be and it’s far easier than trudging down the high street with a load of bills!
Paula Marriss is a financial advisor and editorial contributor at The Money Zone. For more information on personal finance visit http://www.money-zone.net/
Article Source: ezinearticles.com|
|