Savings accounts are offered by banks and credit unions and are a safe place where you can store money while you earn interest on your money.
Savings accounts are typically used for short term savings goals and emergency savings.
Traditional Savings Accounts
Traditional savings accounts can be opened at most financial institutions and usually with just a little bit of money. With a traditional savings account:
- Your account will start earning interest once you have met the minimum balance requirement.
- Allow easy access to your money. You can access your money through traditional banking services such as tellers and online accounts.
Money Market Accounts
Money market accounts typically pay a slightly higher interest rate than traditional savings accounts.
- The difference between a money market account and traditional savings account is how you access your money.
- You can write checks from the money market account, but the number of checks you write and the number of times you can take out your money are limited.
Certificates of Deposit (CD)
With a certificate of deposit (CD), you agree to “lock up” a certain amount of money for a set period of time.
- CDs pay higher interest than most traditional savings and money market accounts.
- At the end of the CD period, you get your money back plus the interest it has earned.
- If you withdraw the money before the deadline, however, you’ll pay a penalty fee.
Things To Consider When Choosing A Savings Account
- Does the account help me with my savings goals?
- Are there monthly fees or service fees and can I afford them?
- Is there a minimum balance requirement?
- Does the account earn interest and how much?
- How easily can I access my money in the account?
- Does the account have check-writing capabilities? Do I need check-writing capabilities?
- Are there transaction limits on the account?
- Is the financial institution insured by the FDIC or NCUA?