Imagine a world where merely having a savings account is a luxury. Sounds ridiculous, right?
Unfortunately, we live in one such reality. A whopping majority of Filipinos simply remain unbanked, mostly because they can’t afford the minimum required balance, live and work in remote places, or just don’t want to put their money in banks, period.
Now, the first two reasons are socio-economic factors beyond the control of the affected parties. The last one, however, is a different beast entirely. If you’re among those who avoid opening a savings account for that reason, we hope that the following benefits that come with such will make you reconsider:
- Savings accounts earn interest.
- Storing your money in a bank is safer than keeping it hidden at home.
- Most investments require savings accounts.
- It’s the gateway to other financial tools.
- Having a savings account is good for both liquidity and security.
- A savings account can strengthen your visa and/or loan applications.
- You can track your financial progress via your savings account.
Okay, fine. The interest rates on most savings accounts are insultingly low, and they’re hardly a match for annual inflation.
Still, a little interest is better than none at all. Hence, you’re still better off stowing your cash in the bank rather than in your piggy bank at home.
Furthermore, there are deposit accounts that provide higher interest rates if you fulfill certain criteria.
“But what if the bank goes under? Won’t my savings go down with it???”
Relax, the Philippine Deposit Insurance Corporation (PDIC) provides a maximum deposit insurance of up to Php500,000 per bank. That means you’ll still get half a million of your cash back, no matter what happens. (Just make sure you bank with legit, PDIC-registered banks though, okay?)
And if you have more than Php500,000 saved up? First of all, congratulations! You can now go ahead and split that up between two banks at least to take advantage of the PDIC coverage. There, job done.
Savings are just one half of the equation. To achieve real financial security, you need investments too.
Most investments require pre-existing savings accounts. Unit Investment Trust Funds (UITF’s) and mutual funds are just two of many that do. This is because your earnings and dividends from the said investments will go into your savings account.
Having a healthy bank account paves the way for credit cards. Used wisely and responsibly, these can give you significant financial leverage.
A well-funded savings account can also give you an ATM card, which brings us to…
Sure, it’s great to have cash at home. You wouldn’t want to find yourself out of pocket if an emergency occurs on a banking holiday.
On the other hand, a savings account can also give you access to money even on such days. ATM’s are now more widespread. Plus, a lot of establishments accept debit cards, sparing you the need to carry a lot of cash.
Lastly, if you misplace your cash, it’s pretty much gone. In comparison, if you lose your ATM card, you can just call your bank to block or cancel it, thus keeping your funds secure.
Planning to go abroad soon? You’ll need to show proof of your financial capacity, and this is where a savings account comes in. Bank certificates are testament to how much money you have in the bank. Sometimes, if you’ve got quite a healthy balance, embassies won’t require you to produce additional documents (e.g., income tax returns, etc).
The same goes for loan applications. Banks are more likely to grant yours if you have a savings account.
A lot of savings accounts come with passbooks. I like to label the entries on mine so I can keep track of my income and expenses. Also, I like to look back on my previous passbooks just to see how far I’ve come in my financial journey.
I’ve still got quite a way to go, but seeing evidence of progress is certainly encouraging.
Despite all the bad news proliferating on our feeds, the Philippines has actually been enjoying unprecedented levels of economic growth. It just so happens that the benefits aren’t trickling down as quickly or as well as they should.
Hopefully, there will come a day when more Filipinos will get to enjoy the fruits of the country’s progress. Perhaps then, something as basic as a savings account will no longer be a luxury for the privileged few, but rather, an intrinsic part of everyday life.