Savings account is the most common bank account every bank
offers to their retail customers. It yields interest and offers high liquidity
of funds that can be withdrawn on demand during banking days.
If you wanted to grow your hard-earned money through your
savings account, you must consider the following factors that may directly
affect your saving account growth potential.
INTEREST RATES
Open your savings account with a bank of sound financial
standings and offers high interest rates compared to other
banks.
It is better to conduct your banking needs with universal banks
than with commercial and thrift banks. Most universal banks listed by the BSP
have depth financial fundamentals.
Please note, however, that each banks offer different
interest rates for savings accounts. It is a surprise to know that only few
people are aware how much is the bank’s interest rates for savings accounts.
For your reference, Fig. 1 below shows the interest rates
offered by some universal banks doing business in the Philippines.
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| Fig. 1. Savings Account Rates |
Although savings account interest rates are very low, it is
in your best interest to get the higher interest for your hard-earned money.
Please do note that all interest that you will gain from
your savings account will be subjected to 20% withholding tax before the net
interest will be accrued in your savings account balance.
MINIMUM BALANCE TO
EARN INTEREST
You might not be aware about this yet but you may not be earning
interest for your savings account.
Banks do have minimum balance for you to earn interest. This
amount can be different with the minimum Monthly ADB (Average Daily Balance). If you are maintaining your savings account at
Minimum ADB and your bank’s Minimum Balance to Earn Interest is higher, you will be surprised later to find out that your money is not earning interest at
all.
CHARGES BELOW MINIMUM
ADB (Average Daily Balance)
This is true. You will be charge with penalties if your
savings account balance falls below the minimum Average Daily Balance. This is
in the form of service charge by the bank for maintaining your account and will
be deducted on your account in case your balance falls below the minimum Average
Daily Balance.
To avoid this painful deduction from your savings account, you
should know your bank’s minimum ADB. In case you need cash very badly, make
your withdrawals but don’t withdraw below this limit. Maintain your minimum ADB
until you have your extra cash again to make deposit.
CHARGES FOR DORMANT ACCOUNTS
Aside from being penalized with service charges below the minimum
average daily balance, banks, too, deducts service charge for dormancy in a
monthly basis.
Banks collects monthly dormancy charge if the dormant
account’s balance falls below the required minimum ADB and your account was
considered dormant. An account was considered dormant if no client –initiated transactions
was made within the minimum period of dormancy as provided by your bank.
To avoid this unnecessary charge, initially you must know
the minimum dormancy period for the type of account you have. Secondly, don’t
fall below your minimum ADB. Lastly, keep your account active by making
transactions at least once before the minimum period of dormancy.
Traditionally, we always think that putting our hard-earned
money in the bank is safe and wise compared to keeping it in our piggy banks. I
may say it is safe provided that you are aware of your bank’s account maintenance
and service charges. Knowing these will protect your savings from unnecessary
deductions and payments.