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It is a sad fact that many people today do not have some type of savings account plan to their name. Most of us are just living paycheck by paycheck and simply depend on credit in order to get by.
Looking at how things work these days, it is no small wonder. Credit card companies and banks encourage the use of credit to pay for everything. Basically, the idea is: Buy today, and worry about finances tomorrow. And we all take it hook, line, and sinker.
However, it pays to have some kind of savings account to your name. Savings account is almost cash in that it allows you make purchases. But unlike credit accounts or debit accounts, you cannot use your savings account directly as money, such as when you write a check.
Instead, in a savings account, what you do is set aside a portion of your liquid assets - that is, your money - so that you can make purchases at a later time. In the meantime, your savings are earning interest which are applied and added to your account. In effect, your money is growing even though you are not doing anything with it. It is definitely way better than stashing cash under the mattress.
The interest, of course, is the bank's payment in return for the use of your money. You see, in a savings account, you are not technically depositing your money with the bank, although it is called in practice a 'deposit.'
The relation between you and the bank is that of a contract of loan. You are the lender and the bank is the borrower. So when you deposit your money in your savings account with the bank, you are in effect extending a loan to the bank. The bank will use the money in various lucrative investments and in return for the temporary use, they will pay you interest and apply it to your savings account.
You can withdraw your money from your savings account anytime. And the way to do that is through your savings passbook or through your ATM card. The former requires a visit to the bank in order to withdraw your money. While there are banks that require you to withdraw cash only from the branch of the bank where you opened your savings account, there are also banks that allow you to withdraw from any one of their branches.
With ATM cards, you can withdraw money through an ATM machine, which is virtually everywhere these days. You can find them in malls, department stores, and most anywhere.
The use of ATM machines makes it much more convenient for savings account holders to get a hold of their money. Instead of having to go to the bank in order to get cash for purchase, they can simply go to the nearest ATM machine and make the withdrawal. In this way, you have the convenience of using credit cards but without having to worry about how you are going to pay for all your purchases.