Today, absolutely everyone can open a deposit in an American bank without the additional provision of any permits or licenses.
What deposit accounts do American banks offer?
American banks use several types of deposit accounts. Naturally, each of these accounts has its own mode of operation, which is best to study in advance, for example:
- Savings account – allows you to keep money in a separate account independent on your personal. Such a tool offers to get extra income in the form of interest. The terms of the agreement provide for early withdrawal.
- Money market accounts (MMA) – this account is similar to a savings and current account. An important requirement for its opening is the mandatory presence of an initial deposit in the amount of $ 2500 to $ 25,000. The size of the initial deposit will depend on the American bank you choose.
- Certificate of Deposit (CD) – this type of American deposit allows you to get the highest income in exchange for placing funds without the right to withdraw them for a certain period. Well, in case you urgently need money, you will have to pay a penalty for terminating the agreement. A fine means recalculation of accrued interest, or rather, their complete loss.
As claimed by Payday Loans Kankakee IL that the interest that you earn on a deposit in a US bank will be expressed in the form of annual percentage yield (APY), which also includes the accrual of compound interest (interest on interest).
What is US Deposit insurance?
Deposit insurance is a mandatory amount of funds that must be paid to the client in the event of a bank bankruptcy. So, in America, the amount of deposit insurance is $ 250,000.
How does the US deposit insurance system work? At the time of the bank bankruptcy, the payment of such deposits is handled by the FDIC – the Federal Agency for Deposit Insurance, which was created in 1933. In its functioning, the agency uses two methods to reimburse deposits:
- reorganization of a bankrupt bank by taking over by another bank and assuming all the obligations of the bankrupt bank;
- self-payment of deposits to all affected depositors by the federal agency.
Deposit rates in American banks
Investments of this type in US banks are somewhat different from those offered by European banks. People put money there at interest in order to preserve capital. In fact, there is no question of profit in fact, it is very small.
When examining deposits in the United States, pay attention to the fact that here they can charge money for opening an account and maintaining it. As you can see, interest rates on deposits in the US are completely low. Our banks offer almost the same yield, and sometimes even higher.
Another bank offering savings accounts is Wells Fargo & Co, which ranks fourth in the country in terms of shares deposits. Its fundraising programs are:
- standard savings account, rate – 0.01%. Maintenance fee – $ 5 per month, but not charged for storage over $ 300;
- premium savings account, rate – 0.03 or 0.06%. The service fee is 12%, but it is not charged when placing more than $ 3500.
Special CD accounts
Otherwise, they are called certificates of deposit – this is a separate investment tool. If a savings account is just an account with the possibility of making any incoming and outgoing transactions, then the certificate of deposit is an analog of the term deposit.
The interest on deposits in the United States will be higher if you choose to place the CD. The depositor deposits money for a certain period. Interest is charged periodically, according to the terms it can be monthly, quarterly, every six months. They can be added to the funds in the deposit account or paid to the depositor.
For example, consider such a deposit in America offered by PNC Financial Services:
- several types of certificates are offered with validity from 7 days to 10 years;
- the minimum amount to open is $ 1,000;
- the most expensive levied certificate is assigned a maximum rate, but the agreement is signed for 36 or 60 months. The amount to open is at least $ 10,000;
- the standard CD rate directly depends on the placement period and the amount on the account. The longer the term, the higher the profitability. The maximum 0.4% is assigned when choosing a period of 10 years and an amount of at least $ 25,000. For comparison, with a period of 1 year – 0.05-0.1%.
As you can see, interest rates in US banks are far from low. This is how the system works: rates on deposits are directly correlated with rates on loans. In America, cheap loans and penny rates on deposits. This is why Americans are more likely to choose to invest in securities.