Deposit Account Tips That Will Help You Get Better Yields

2 min read By eCompareMo on November 14, 2014

When looking for a certain type of investment where you can simply leave your money and watch it grow, one of the best places to put your money to is the bank. With banks, potential depositors will have different options where they can invest their money. With deposit accounts, you can simply create an account, put your money in the said account, and wait for your account’s maturity date—and there you have it, your account finally made interest. However, you can maximize your whole deposit account by doing the following steps.

There are several types of deposit accounts on the market today, and each type of deposit account offers specific advantages to users. For you to fully take advantage of the perks, you need to differentiate the terms offered by each account.

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The most basic of all deposits, which is a savings account, allows users to put up a small amount minimum balance and withdraw their funds anytime without penalties. While savings account may be the most convenient of them all, the yield is the lowest. Furthermore, certain deposit accounts have minimum balance where the account will finally incur interest. Some accounts require a certain amount of money to be deposited in a savings account before it starts to yield interest—and the interest rate for savings accounts are very low.

When it comes to deposit accounts, time deposits strike the balance between maturity and yield. In time deposit accounts, depositors can put their money in the said account and select the tenor of the account. Once the account reaches it maturity date, the account holder can choose to either withdraw the amount along with the interest or reapply for a new time deposit account. While the interest is much higher here as compared to regular savings account, the user will not be able to withdraw the money until the maturity date—or he will have to pay stiff penalties for withdrawing before the maturity.

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The final option for those who are thinking of parking their money in banks temporarily is the money market deposit accounts. Highly recommended for people looking for low-risk yet moderate gain investments, money market deposit accounts allow depositors to “put up” money for the banks, which will be handled by the bank’s assigned account manager. Once the account manager has pooled enough money from a number of investors, the bank will invest in liquid securities such as government securities, certificate of deposit, commercial paper of companies, and other low-risk highly liquid forms of investment. While the gains here are much higher than other deposit accounts, withdrawing your money from money market deposit funds prematurely entails tremendous penalties.

Deposit accounts are good places where you can put your money, at least temporarily. Aside from providing yield to people who want low-risk forms of investment, it creates a culture of saving among Filipinos where they can put their funds for a while and wait for the returns to come in. While earning interests is a good way to earn a little, keep in mind that convenience of being able to withdraw your funds in case of emergency should also be taken into consideration.