Advantages & Disadvantages of Saving Money in the Bank

lindsay giguiere, bank savings accounts

We all know how crucial it is to save money. With so many routes and strategies to contribute to your savings, it’s easy to get confused about the whole process. What are the advantages and disadvantages of putting your money in the bank for a rainy day? Let’s find out.

Many people like to save money by placing their dough in the bank while others prefer to keep it at home. Some choose to invest their money in the stock market. The most common and safest method of securing your funds is to open a savings account, but is it the wisest method?



Saving your money in the bank is probably the easiest way to secure funds and contribute to your savings. The entire process is user-friendly and it’s very convenient to access your money. Whether you’re depositing or withdrawing money from your savings account, it’s hassle-free, especially when you’re using a banking app on your phone.

You’re able to set up automatic transfers from your checking to your savings account and when you link these accounts, you can avoid overdraft fees, which add up. If you spent too much money on that deluxe pedicure, but only had enough money in your checking for the regular pedicure, you would have a negative balance in your account and accrue fees.

When your account is set up for overdraft, money from your savings will shift to your checking to ensure you remain in the positive. It’s good to know the security blanket is there, but I wouldn’t make it a habit, even though those hot stones are pretty fantastic.


No, this is not you drinking a cocktail as you admire the amount of money in your savings account. Sounds fabulous and I hope you do that often, but liquidity means the money in your savings accounts is readily available. If liquidity is important to you, then you should consider a savings account rather than investing in stocks.


There’s no denying that banks serve as one of the safest ways to protect your hard-earned money and profits. Suppose you invest a large sum of money in the stock market. The fear of losing that money is a reality, however the bigger the risk, the bigger the reward, as they say.

With a savings account, your money is untouched and can even make money, depending on the interest rate. Right now, it’s not going to be a lot as interest rates are super low.


Another huge benefit of saving money in the bank is that the NCUA or the FDIC federally insures your savings. You can secure your savings up to $250,000 in case a credit union or a bank closes for any unforeseen reason or unfortunate event. In the world we live in today, anything’s possible. Imagine discovering all your hard-earned money is gone because a bank went out of  business? No thank you!

Emergency Fund

Saving money in a bank lets you build an easily accessible emergency fund. You never have to worry about scrambling to get money if your car breaks down or the plumber leaves your bath running with the drain down and then leaves your house (true story). Whatever expenses arise in your life, you’ll be prepared.


One of the best parts about saving money in a bank is they offer low-cost services to account holders.

  • Bill Payments
    • A bank account allows you to manually pay your bills, free of charge.
    • You can also receive checks for a minimal amount, or even free, depending on the amount of money in your accounts and status with the bank.
  • Money Wiring
    • Using a money-wiring company requires a small fee.
    • Typically, that fee is a percentage of the amount you transfer, so the more you spend, the more you pay.
    • Wiring money from your bank is usually subject to a flat fee, regardless of the amount of money sent.
  • Credit Access
    • Banks prefer to lend to existing customers, which puts you in a good position if you’re looking for a new car, seeking personal or student loans, or purchasing a home.
    • Lenders outside your bank may offer you quick cash, however, you’ll be hit with high-interest rates and fees.


There’s certainly a lot of reasons to open up a savings account, however, anything with a pro has a con.

Low Returns

As mentioned earlier, your money that’s sitting in a savings account will earn interest. While it’s safer, there are better ways to grow your money, such as mutual funds. Due to COVID, interest rates have dropped to an all-time low, which is helpful if you’re buying a house or owe money. Not so much if you’re trying to make money.

Convenient to Spend

The convenience that was an advantage can also be looked at as a disadvantage. Easy access means a temptation to spend instead of saving. Part of financial health is knowing your limits and following the rules. It’s not worth it to take money out of your savings account unless you absolutely must.


This benefit can turn disadvantageous because you’re only insured up to $250,000 at one particular bank. If you plan to secure funds beyond this amount, there are ways to get around it. One example is to utilize multiple banks.


Fraud is a huge problem and one that causes a myriad of headaches. Trust me, I know, and it’s not a fun time or a good use of your time. Talk to your bank to understand what their policies are.

Now that you’re armed with specific information about the pros and cons of savings accounts, you can make an educated decision as to where your money should live. The good news is you have options. The great news is you have money. Make sure you save it wisely.

Hope You Enjoyed the Read!

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Authored By: Lindsay Giguiere

Lindsay is an entrepreneur, influencer, and advocate with a passion to help women and their loved one’s thrive beautifully.

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