Savings accounts are accounts maintained by retail financial institutions In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are highly regulated by government that pay interest Interest is a fee paid on borrowed assets. It is the price paid for the use of borrowed money, or, money earned by deposited funds. Assets that are sometimes lent with interest include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is but can not be used directly as money Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment ( for example, by writing a cheque A cheque or check is a piece of paper (usually) that orders a payment of money. The person writing the cheque, the drawer or maker, usually has a chequing account where their money is deposited. The maker writes the various details including the money amount, date, and a payee on the cheque, and signs it, ordering their bank, know as the drawee,). These accounts let customers set aside a portion of their liquid assets while earning a monetary return.
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Regulation
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In the United States, under Regulation D, 12 CFR 204.2(d)(2), the term "savings deposit" includes a deposit or an account that meets the requirements of Sec. 204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution A depository institution is a financial institution in United States, such as a savings bank, that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation, the depositor is permitted or authorized to make up to six transfers or withdrawals per month or statement cycle of at least four weeks. The depository institution may authorize up to three of these six transfers to be made by check, draft, debit card, or similar order drawn by the depositor A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to and payable to third parties. There is no regulation limiting number of deposits, however some banks may choose to limit deposits themselves.
Within most European Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally divided from Asia to its east by the water divide of the Ural Mountains, the Ural River, the Caspian Sea, the Caucasus region (Specification of borders) and the Black Sea to the southeast. Europe is bordered by the countries, interest paid on deposit accounts is taxed at source. The high rates of some countries has led to the development of a significant offshore savings industry. The financial centres for either information on interest earned to be shared with EU The European Union is an economic and political union of 27 member states which are located primarily in Europe. Committed to regional integration, the EU was established by the Treaty of Maastricht in 1993 upon the foundations of the European Communities. With over 500 million citizens, the EU combined generated an estimated 28% share (US$ 16.5 tax authorities or for withholding tax to be deducted on interest paid on offshore accounts, because of concerns relating to potential tax evasion Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. By contrast, tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an. Account holders must either pay the withholding tax or disclose account holder information to relevant tax authorities.[1]
Costs
Withdrawals from a savings account are occasionally costly and are sometimes much higher and more time-consuming than the same financial transaction A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. In accounting, it is recognized by an entry in the books of account. It involves a change in the status of the finances of two or more businesses or individuals being performed on a demand (current) account. However, most savings accounts do not limit withdrawals, unlike certificates of deposit A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions. In the United States, violations of Regulation D often involve a service charge, or even a downgrade of the account to a checking account. With online accounts, the main penalty is the time required for the Automated Clearing House Automated Clearing House is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit payroll and vendor payments. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other to transfer funds from the online account to a "brick and mortar" bank where it can be easily accessed. During the period between when funds are withdrawn from the online bank and transferred to the local bank, no interest is earned.
Online savings accounts
Some financial institutions offer online-only savings accounts. These usually pay higher interest rates and sometimes carry higher security restrictions. Those with high interest rates have risen in popularity with the rise of the internet.[2]
References
- ^ http://www.ft.com/cms/s/ae51ab84-0d9f-11db-a385-0000779e2340.html
- ^ James. "Online Savings Accounts". http://www.interestsavingsaccounts.net/2009/03/online-savings-accounts-rise-in.html. Retrieved 2010-01-10.
External links
- Online Banking at the Open Directory Project The Open Directory Project , also known as Dmoz (from directory.mozilla.org, its original domain name), is a multilingual open content directory of World Wide Web links. It is owned by Netscape, but it is constructed and maintained by a community of volunteer editors
- What Savings Account is Best For You? It is not always High Interest Rate.
Categories: Banking | Interest bearing instruments
Wed, 23 Jun 2010 16:34:48 GMT+00:00
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