How to make money with a Savings Account

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Posted by on Tuesday March 27, 2012 10:10:47:

I did a brief write-up on making money with your bank account and now I want to focus on what it takes to do so, even with a savings account.

What is a savings account? It is an account that is mostly held with a bank that allows you to save your money while at the same time have unrestricted access to your funds.

How do people make money with their savings account?
It is quite simple. By means on interest. Banks normally pay an interest to you for the money you save with them. They can do so because they make money by loaning your money to debtors who are paying a much higher rate for their loans. Don't bother about how much banks make with your money but how you can make money with them.

Interest on Savings account
In Nigeria, the interest on savings account is quite low as it is around 3% to 6% per annum on your capital which you leave untouched for a period of time. How this works is that assuming you have invested N20,000 into a savings account that pays an interest rate of 6% p.a, it means that for every year you leave at least N20,000 with your bank, you will earn N1200 which is 0.06*N20,000.

Let me give an example:
Assuming you have a savings account with Access bank in Nigeria with the following details

Capital: N200,000
Interest on savings: 6% p.a

Your income from that savings which remain untouched for a year will be:

0.06 * 200,000 = N12,000.

So if you want to be making N1,200,000 every year from a savings account, then maybe you should invest N20,000,000. But really, if you have that kind on capital, then you should go for a fixed deposit account which normally pays a much higher interest than savings.

Do you have to wait for a year to earn interest in savings? Not really. Nowadays banks tend to pay interest on a monthly basis which is for every 30 days that you leave a basic amount untouched. So assuming you invested N200,000 into that savings account with the said interest rate, your extra money will be N12,000/12 = N1000 for that month.

One benefit that savings account has over Fixed deposit account is that you can still have access to your funds anytime you want and still earn interest on that balance.

Things to note when operating a savings account
- Inquire about the terms and conditions
- Get to know the interest on savings and compare with other banks
- Ask about the minimum opening capital.

Re: How to make money with a Savings Account Reply by Augslaw on Tuesday July 10, 2012 at 14:50:14:

Hw can i open saving acct with 1000 in nigeria banks which offer higher interest

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