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What is an interest-bearing account and what are its advantages?

Interest-bearing account

Saving is not just a trend, but rather a necessity: people want to ensure their peace of mind and security, and to have something to fall back on if the unexpected occurs. For this reason, savings products are on the rise: current accounts, savings accounts, interest-bearing accounts...

Specifically, an interest-bearing account automatically pays interest for the money deposited in it. Another of their most important features are that they allow us to save; they give us liquidity at all times, allowing us to withdraw money without penalties (unless it offers us a higher return on the condition of holding the investment for a specified time; in any case, this must be reflected in the conditions and requirements of the account). It also offers security, especially the lower the interest rates are.

It could be said that this account is halfway between a current account and a savings account, since, without the need to have your salary paid into it, you can carry out the same operations as with a current account (direct debits, transfers, possibility of having associated cards... ), and it also offers a return for maintaining the capital.

How is remuneration established?

It is established based on an excess (this means that there would be a remuneration cap, after which the money in the account would not be remunerated), and a minimum balance may also be required for there to be remuneration.

As with mortgages, the payment of interest may be at a fixed or variable rate. It may also be based on balance tranches (in this case each tranche would have a certain interest rate); or progressive (higher depending on the tranche).

Although it is normal for the remuneration to be for an indefinite period, there will also be accounts that offer promotional periods, or with permanence obligations.

Advantages of an interest-bearing account

First of all, they offer a return with the settlement of interest, which usually occurs every month: your money will grow little by little.

Second, it guarantees liquidity for a specified period of time; you just have to request a redemption for your money to be available. This is where it differs from any other deposit account, which does not allow you to access the capital at any time, unless you are forced to deposit the money for a certain period of time to obtain higher returns; in any case, it will have to be reflected in the conditions of the account.

Third, both principal and interest are guaranteed, since they are not associated with any market or index. They are not at risk as they are not invested. In addition, they have the Guarantee of the Deposit Guarantee Fund.

Finally, it will allow you to carry out daily operations with ease and convenience: direct debits, free transfers, free associated cards, etc.

The disadvantages include a lower interest than that offered by other products (such as deposits), or that they only pay remuneration up to a balance or time limit. Another is the limitation of operations, although that depends on each account and each bank; it may require a certain undertaking and may have quite high fees for some services.

Differences between an interest-bearing and a savings account

Although they are similar, the savings account does not allow some operations, such as having associated cards or direct debits.

Before opening an interest-bearing account, as always, you should carefully analyse all the alternatives, compare and choose the one that best suits your profile. It is also important to look at the return (after all, this is what we are looking for); at the fees; at the terms and the permanence.


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