Accounts & Savings

Accounts & Savings (6)

Bank accounts… How to select the right one!

Choosing the right bank account for your needs can be tricky. There are mainly two kinds of accounts: checking and saving. The difference between these two types is that a checking account allows unconditioned withdrawals and deposits, while a saving account is more restrictive.

 

For starters, you have a checking account also known as current account. The checking account is a transactional deposit account that is intended for daily needs. This type of account allows unlimited number of transactions. Withdrawals can be done through checks, ATMs, over the bank’s counter, etc... This form of account provides its holder with checkbooks, as well as debit cards to grant access to the account balance for electronic debits in stores.

 

Lebanese banks offer a varied selection of current accounts that caters to different needs. Current accounts come in various types: business, students, joint accounts, etc... Some banks also allow overdraft limits on some current accounts.

Moreover, Lebanese banks offer many financial packages. Conditions, terms and offers vary from one institution to another. For a fixed monthly fee, the current account bundle is a package where the customer benefits from an array of free or discounted services, such an electronic card, a checkbook, and electronic payment of utility bills. Other packages are also available, some target special fields and services. The most common packages are Internet accounts, payroll accounts, wedding accounts and youth accounts. Depending on the bank and package, these types of bundles can be extremely beneficial for the targeted customer, however they might become disadvantageous to clients who don’t need various banking services.

 

The second type of account is the saving account. This deposit account earns interest. Unlike the checking account, saving accounts are considered an investment, and are not intended for use on day-to-day transactions.

 

A saving account is considered a liquid investment. The account-holder has the option of choosing between different types: Some types of saving accounts, such as the Sight Saving accounts allow holder to write up checks, amongst other limited number of transfers and transactions, enabling funds to be transferred restriction-free from one account to another and withdrawals made without prior notifications.

On the other hand Term Deposit accounts vary from one bank to another and are subject to terms and conditions. Deposits made into these accounts are subject to a fixed term. Withdrawals are allowed by giving prior notice or at maturity.


Before heading to your local bank, visit bnooki.com to compare and choose between the different accounts offered by Lebanese banks.

Tuesday, 27 January 2015 Written by

Retirement Plans: Saving for your twilight years!

None of us likes to admit it, but the fact is that none of us are getting any younger. Thus, instead of burying our heads in the sand, we should be squaring up to senior citizenship and increasing longevity and sort ourselves out with a sensible retirement plan. We need to look carefully at our bank balances and decide what to do with our cash.

A retirement plan is a financial plan linked to savings and investments whose purpose is to provide the saver with a source of income after they have finished working.  It’s not enough just to think about day-to-day financial needs, you also need to take into consideration lifestyle choices and other expenses you may occur.

In Lebanon, Lebanese banks usually sell retirement plans that are linked to savings plans, rather than just a savings account. A saving account differs from a saving plan in the insurance coverage provided as well as the mandatory periodic deposits. This means that the client benefits from not just the accruement of regular deposits, but also from a life insurance policy in case of death before his retirement.

 

Like any saving plan, there are pros and cons:

Pros

Cons

  • Savings plans take a lot of the leg work out of saving for the future as you’re forced to save money due to the mandatory periodic deposits.

  • Life Insurance is also included. This means if you die, your beneficiaries will receive the sum insured or your total savings, whichever is bigger.

  • You may access your funds if urgently needed, however penalty may apply depending on the bank and the insurance company’s policies.

  • Not all the costs you pay are added to your savings as the insurance policy’s premium is settled from the periodic deposits.

  • The insurance company’s profits affect your interest rates earned, although some plans guarantee a certain minimum interest rate.

  • Plans are usually long term – not ideal if you want to see a quick return.



For more information on finding and comparing retirement plans at Lebanese banks, visit Bnooki.com.

Friday, 23 January 2015 Written by

Savings Accounts in Lebanon: wasted opportunities or recourse on rainy days?

With the Christmas holidays just around the corner, we’re all starting to count our hard earned money. “Do I have enough money to splash out on presents for everyone?” is a question we’ll be asking ourselves very soon, if we haven’t asked it already. Are you finding yourself a bit strapped for cash this year? Then consider looking into a savings account at a Lebanese bank., at least you will be saving yourself for next year.

 

“I don’t mean to sound stupid, but what exactly is a savings account?” I hear you say. “And how does it actually work?” Well, here are the answers to those all important questions that you might be too shy to ask.

 

By definition, a savings account enforces you to save money by not allowing the same ease of access as you would encounter with your current or checking account.  So, the money in it is not money you would generally use for your day-to-day expenses, but funds that you are happy to tuck away for a rainy day. There are different types of savings accounts; including the regular savings accounts with instant access - does what it says on the tin i.e. allows you to access your money instantly (but at a price: being either lower interest rate but higher flexibility as it is for the Sight Savings Account, or a penalty applied on withdrawals from a term deposit account), and the  Savings Plans - monthly deposits are required.

 

Banks’s cycle works like this:

  1. You open an account in a Lebanese bank and deposit your money.

  2. The bank pays you interest on the money that you have deposited.

  3. The bank can then lend your money to other people and charge them an interest rate higher  than the one they are paying on the deposits.

  4. Everyone is happy  

 

But what are the pros and cons of taking out a savings account at a Lebanese bank?

 

Pros

Cons

  • Guaranteed Interest Rate

  • Accessibility

  • Rainy day funds

  • Encourages sound financial habits

  • Safe and convenient growth

  • Low returns / Missed opportunities

  • Minimum balance required to earn interest

  • Withdrawal limitations

  • Fees applied

 

Some of these pros and cons might sound similar, for example when it comes to interest rates. However, you have to decide what kind of person you are – are you a Safe Sami or a Risky Rita? If you know your stuff and are willing to take the risk, then there are definitely more lucrative methods of investing your cash. But, on the other hand, if you are a bit of a nervous type, then savings accounts are for you.

 

For more info on saving plans in Lebanese banks, visit the “Savings Plans” tab on Bnooki.com or visit http://www.bnooki.com/accounts-savings

Wednesday, 10 December 2014 Written by

Save for your Child’s Education through Children Savings Plans!

Children savings plans allow you to save money for your children’s future education and expenses through an investment program. This happens by depositing a monthly amount into this special kind of savings account at the bank and earning a special interest on it. Today, most Lebanese banks offer a children savings plan, which is commonly known as Bancassurance in Lebanon. These savings plans are mostly provided in USD among banks in Lebanon.

Features of children savings accounts vary from one bank to another. The key characteristics of these savings plans are:

Monthly settlement: The minimum monthly settlement differs between banks. Some banks recommend their customers to add an ascending annual rate to their monthly settlement in order to protect them against inflation, especially that these savings plans are usually long-term ones.

Interest rates: The interest rates on children savings plans are usually decided according to international markets prices and thus they could fluctuate with time. But several banks do guarantee you a minimum interest rate at the beginning of your plan period.

Plan period: In most banks, saving can start the moment your child is born and thus the period could normally stretch up to 18 years, when the child starts his/her college.

Insurance: Most children savings plans in Lebanon provide you with life insurance coverage along with the plan. Commonly, the beneficiary would be your child.

Let’s say you have a 1 year old child, and you subscribe to the plan with a monthly premium of 50 USD. Let us consider that you add your settlement by 2% every year in order to compensate for yearly inflation. When your child becomes 18 years old, you would have paid a total of 12,000 USD. Assuming that the bank guarantees a 5% yearly interest rate, your child’s end of period sum would be around 18,700 USD.

What if you decide to stop the savings plan before the end of the agreed period? This could be due to many reasons: monthly payments, loan settlements, family needs, etc. The procedure here differs between banks in Lebanon, but most banks allow you to withdraw the whole amount that you paid, in addition to an interest. Consequently, you may have to pay a small penalty for breaking the contract. Make sure you ask your bank about this point, while applying for a children savings plan. For more info on Children saving plans in Lebanese banks, visit the “Savings Plans” tab onBnooki.com.

Friday, 07 November 2014 Written by

Current Accounts: How do they work & what are the right Accounts for you to open?

All Lebanese banks give customers the option of opening a current account, which is also known as a demand deposit account. These accounts form the bulk of daily transactions: Deposits, withdrawals, and transfers. Such current accounts also target all types of customers: Businessmen, students, workers, etc.

Current accounts allow the account holder to deposits and withdraw money anytime. However, holders of these accounts do not get interest on their available balance which could be to your disadvantage if your account holds a reasonable amount which you do not use regularly.

Various advantages of current accounts:

  • Online Banking: Managing your account through the net
  • Bill & Salary Domiciliation: Your salary is directly transferred to this account, and your bills could be automatically paid
  • SMS Service: Staying up-to-date with your account and transactions
  • Debit Cards: Using your account to pay in shops & public places, withdraw money through the ATM, pay online, etc.
  • Checkbooks: Writing checks in order to facilitate payments from your account to other people

Many banks in Lebanon do not require an initial amount for activating a current account, though some others may require a minimum amount.

There are also types of current accounts that Lebanese banks tailor for specific needs: Wedding accounts, accounts for emigrants, accounts for youth and teenagers, etc. These packaged accounts – as they are generally called- target specific people and are better adapted for their needs.

Features of packaged accounts vary from an account to another: Account charges, minimum limit, services and benefits, etc. all depending on the typical profile of the beneficiary.

In addition some of these accounts have two main advantages over ordinary current accounts: The possibility of getting return from interest rate and/or of benefiting from an overdraft facility.

An overdraft facility offers you additional flexibility by allowing you to withdraw more credit than the available balance in your account, in a form of a small loan, which you have to pay with an added interest later. As for the interest rate paid to customers on current accounts, it is usually lower than the rates in savings accounts.

Packaged accounts benefits also differ between banks in Lebanon. Some banks are known to have higher interest rates but may charge greater monthly fees than others; other banks might give low interest rates while providing more services and rewards such as insurance, points, miles, etc.

Choosing the right packaged account is important to achieve the highest benefit. For example, a packaged account for a student is very different from the one tailored for entrepreneurs. That’s why you should compare available accounts and their features before choosing the one that suits you.

The comparison method could be a very valuable tool to use: Visit bnooki.com where you can compare between current accounts and packaged accounts across many Lebanese banks.

Friday, 07 November 2014 Written by

Use your bank to optimize your relationship: A win-win situation!

Most of you in Lebanon have bank accounts at the bank you are used to dealing with: You know the branch manager, you become friends with the tellers, have coffee with the customer service officers, and you know where to park your car when you go there – a key issue in Lebanon. But what most of you don’t know is all what your bank can do for you. Having a better knowledge of this will make you both save money and earn higher interest!

Most banks in Lebanon offer many types of current accounts, different kinds of cards, a wide array of loans etc…Choosing the wrong one might result in that you pay much higher fees or not earn the best benefits and/or interest.

Take for example the current account: How do you know that the type of account you have at your bank is the right account for you and the most convenient for your needs? Consider that your bank offers the following kinds of current accounts (Both do not earn interest):

Account-A:

- Monthly Charges: 10$ per month.

- Fees on Each Bill that is Automatically Paid through account: 1$ per bill.

- Offers: Free debit card

Account-B:

- Monthly Charges: 5$ per month.

- Fees on Each Bill that is Automatically Paid though your account: 4$ per bill.

- Offer: Free debit card

Now consider that you have only one bill (phone bill) that is automatically paid through your account, which account would choose to open? Let’s do the math of what would be you monthly charges on each account:

On Account-A: Monthly Charges of 10$ + Fees on Bill Transfer of 1$= 11$

On Account-B: Monthly Charges of 5$ + Fees on Bill Transfer of 4$= 9$

The obvious answer is Account-B since you pay less monthly charges.

But what if you had 2 bills (Phone and Electricity Bill) that are automatically paid through you account?

On Account-A: Monthly Charges of 10$ + Fees on Bill Transfer of 2$ (2 bills) = 11$

On Account-B: Monthly Charges of 5$ + Fees on Bill Transfer of 8$ (2 bills) = 13$

Here the best option is Account-A. So bottom line, if you need to use the Automatic Bill Payment service through your account and have a lot of bills, your best offer is Account-A. But if you just want to open a bank account for withdrawing and depositing cash and just one Bill Automatic Payment, then go for Account-B.

The same applies for any products offered by Banks in Lebanon, for instance while selecting a credit card make sure you know which card at your bank offers you the right points and rewards.

Not all banks in Lebanon have the time to advise you what is best for you as they have thousands of clients. So go on Bnooki.com, filter by bank and find the best options for you at your own bank!

Friday, 07 November 2014 Written by

bnooki.com Bnooki Magazine: Your guide to banking and insurance in Lebanon

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