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5 Disadvantages Of Keeping Money In The Bank

You might want to consider other ways of keeping that money safe.

Francise Angel



Saving money is unquestionably a wise choice, but there are various ways to go about it.

Instead of investing their money in the stock market, many people prefer to store it in a bank.

There are several factors to take into account when conducting this discussion. Here are a few drawbacks to keeping your money in the banking system.

Minimum Required Balances

A minimum balance requirement or monthly maintenance fees are common for savings accounts.

The bank will deduct funds from your savings account in the form of fees if the required amount is not maintained, which will offset any interest you would have otherwise earned.

Reduced Interest Rates

Comparatively speaking, interest rates are lower than those of other accounts or investments, including money market accounts or certificates of deposits (CD).

Federal Withdrawal Restrictions

Savings account withdrawals are subject to federal restrictions under Regulation D, which are limited to six per month.

If you take out more money than is permitted by law, the banks will charge you a fee, and if you continue to take out money more frequently than six times a month, they may switch your account from a savings account to a checking account.

Utilization And Availability

We are aware that this is a benefit as well, but if you discover that having ready access to this cash is a strong temptation, it may be challenging to save money for the long term.

Rates May Alter

Interest rates on savings accounts are flexible, thus, financial institutions are permitted to set and alter interest rates as they see fit. The rates on high-interest savings accounts will generally follow changes in the federal rate.


Inflation might eat away at the value of the money you’ve earned. If the interest rate on your savings account isn’t competitive, it’ll leave you with a sum that will be worth less in a year than it does now.

Additional Interest

Your savings account interest is often compounded every month or even once a year by the majority of traditional banks and credit unions. This implies that your money doesn’t always reach its full potential, especially when compared to alternative investment opportunities.

Create A Habit Of Saving Money

Here are three suggestions to help you start saving properly:

  • Get an electronic app to help you keep track of your spending. Cutting back on personal expenses or unnecessary purchases can provide you with money for a savings account if you find that you are spending too much on them.
  • Create a system for automatic savings. This tool allows you to “pay yourself first” and establish a saving habit by automatically transferring a small percentage of each paycheck into your savings account.
  • Account sharing. To enable joint savings, think about opening a savings account with your partner.

Final Note

The advantages of a savings account are not dependent on your income.

You should think about the function of your account as well as your access and liquidity options. The best option for your emergency money is probably a savings account. Some financial gurus advise having at least six months’ worth of living expenses set aside in case, but even a few thousand dollars can come in handy.

Before making a choice, take into account the advantages and disadvantages of a certain savings account.

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