Always Be Conscious of the Fine Print When Opening a Savings Account
Whenever financial institutions have special introductory offers on savings accounts, these can always look attractive. These offers and promotions are designed to be attractive and irresistible to potential customers who are looking for services that provide the best quality at reasonable prices. Brochures, pamphlets and customer services either do soft selling or hard selling to get the customers’ attention and commitment in agreeing to opening accounts. Underneath all the brouhaha and attractive come-ons, it all falls down to the terms and conditions in fine print.
One feature that can appear enticing is a high interest rate. However, be aware that the high interests offered on the savings account may have its limits. It is common knowledge that banks, credit unions, and building societies are competing against each other to get more depositors. The money in savings accounts is used by these federal institutions as a lucrative source of finance for the various investments where they are involved. On top of that, the international shortage of credit in the federal government requiring a $1 million dollar guarantee on deposit makes the money in savings accounts all the more valuable. Because of this, more and more special conditions are being added on as clauses when opening a savings account. You are offered really high interests at the start for a few months, then decreasing over time. The high rates are called ‘honeymoon rates’.
Interest rates on savings accounts were really high and have grown to be substantially less over the years. You should jump on the chance whenever there is a special offer for high rates, even if it is for a few months or so. Before deciding to move to another bank or financial institution offering higher rates, or even just changing the account into another that offers higher rates, always be wary of the terms and conditions. A lot of the come-ons in high interest rate savings accounts are not as good as they appear. What you should look for in interest rates pay are the headline rates. For example, something to search for is a savings account that offers a 5.3% interest at a call variable introductory rate. However, some rates apply only at a certain amount such as savings from $10,000 to $500,000 and you will not be receiving any interest at all on the first $10,000 that you save. There are also some new savings accounts that offer introductory rates for new customers. If you have an existing account in any financial institution that is offering great deals for new customers, you may not be eligible for the same great rates and offers. Instead, you can call the institution’s customer service to find out if they can offer better deals than what you currently have.
Another factor to look out for is a clause in fine print stating that the high interest rate is for a limited time only. There are several savings accounts available in the market that make a standard pledge to make a payment on to a current variable cash rate in addition to the promotional bonus rate for a specified time.
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