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Savings Account Questions

What is a savings account?

A savings account is a type of account that is kept at a bank or financial institution and draws interest. The savings account differs from a checking account in the sense that the person cannot draw money out of the savings account through checks or means that they can use to draw money out of a checking account.

Should you also place money into an Individual Retirement Account (IRA) to save on collage grants? 

Case Details: There are $27,000 in a savings account and a matching 401K.

In most cases, the person may want to place the extra money into their 401K instead of an IRA. The IRA is generally not tax deductable where the 401K is tax deductable. The 401K is normally funded with money that is pre-tax. It generally does not matter which account that they person chooses in regards to getting collage funding because all the accounts are treated the same when the finances of the person is looked at.

Would money in multiple savings accounts at different banks be covered by the Federal Deposit Income Corporation (FDIC)?

Additional Questions: Is there a limit in which the money will not be covered?

When a person has money in a savings account, regardless of how many or how many different banks, then all the funds are covered by the FDIC. Information regarding this can be found here; http://www.fdic.gov/deposit/deposits/insured/basics.html and http://www.fdic.gov/deposit/deposits/insured/faq.html. When it comes to any money that a person has in a bank or savings account, there is no financial amount limit that will keep the FDIC from insuring the money and covering it.

What type of a savings accounts should one open for grandchildren?

When the person goes to set up the savings account, they would need to determine what the purpose would be for the person to open the account. If the account is to teach the grandchildren the importance of saving then the following links will help to decide which one would be right for the grandchildren; https://home.ingdirect.com/kids-savings-account, https://www.usbank.com/savings/star-savers-club.html. If the person would like to open the savings account for the grandchildren’s college education, then they may want to consider the 529 plans, which can be found here; http://www.savingforcollege.com/529_plan_details/.

If a person has one million dollars in a savings account, how much interest can the person earn on the money in one year?

If the person thinks that they will withdraw the money before the one year mark, then they may need to look into a CD with no penalties. Most savings accounts generally pay on a large established bank may offer 3.75%. If the person has their money in a savings account that is in a very well known bank, then they may be looking at making $38,000 in interest. The person may want to look into the banks and what interest rates that they offer on interest. The person may also want to consult a finical planner to determine what type of account would be best for them to place their money into.

When a person wants to save money, then they may think about placing the money into a savings account. Savings account interest rates may help the person to gain extra money as well. When the person is considering a savings account, then they may run into questions regarding what savings accounts do, what savings accounts are best, or how would a savings account benefit a person. When these questions or concerns arise, then the person would need to consult an Expert.

Ask a Financial Professional

Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: General
Satisfied Customers: 2170
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
43581946
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Rakhi Vasavada
Financial and Legal Consultant
Satisfied Customers: 2073
Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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