You see, how banks make money is that they use your savings account to lend to someone else. That someone else can either be a person, a company and I think even the government. They charge high interest rates, say... 10% annually and then you get... Uhmmm... TADAAAAA! 1%. Well, that isn't much but don't get upset because we're about to talk about a few positive things about it.
While a savings account isn't ideal to grow your wealth, it remains a fundamental requirement if a person want s to improve his financial situation. It could also serve for convenience, in order for other people to pay you OR get away money from you (kids?).
Open A Savings Account On These Trusted Banks
There are only a few banks that I trust when it comes to opening a savings account in the Philippines. They are the following, in "my" order of preference:
1. BDO - Owned by Henry Sy, merged with Equitable Savings Bank
2. BPI - Owned by Ayala
3. Metrobank - Owned by Yuchengco Group of Companies
I usually don't trust banks that promise high yielding interest rates. If you want to try that, try it only for a short term and don't put all your eggs in it. It's like putting all your eggs on a damaged basket, they could all fall through.
Savings vs Investment
I think they are called "Trust Funds", I'm not sure since I never applied for one. Some people, especially those who have tried to make some money of out investment vehicles like mutual funds and stocks would encourage me to invest instead of save money in the bank.. I understand all the reasons, and not every reason applies to all situations.
If you don't have an emergency fund for example, I think it would make more sense to prioritize that. This is where savings come in handy... One of my friends try NOT TO APPLY for an ATM card, but instead she only have a passbook to keep herself from withdrawing money through ATM machines. It makes sense somehow...
Importance of a Savings Account
Even with all the bad things financial gurus say against having a savings account, it still serves some fundamental importance such as follows:
- Serves as the foundation of your wealth
- Serves as an emergency fund
- A proof of how disciplined you are with your finances
- A source of financial leverage (e.g. downpayment for house and lot)
Do you have a savings account? Why did you open one?