What type of savings account is best for you?
There are generally three types of savings accounts: regular savings accounts, money market accounts and certificates of deposit accounts.
Regular savings accounts are typically used for a financial goal or a specific purpose like savings money for a vacation or home remodel. These accounts are interest bearing and typically have a minimum balance requirement and withdrawal limits. Regular savings accounts offer quick access to funds and are usually best for people who need to save for the long or short run and aren’t as concerned about getting the best rate since regular savings rates tend to have lower interest rates then the other savings options. Your bank may have a high yield savings account option that pays higher interest rates with higher balances, so ask about this option as well.
Money market accounts are typically used by those who want to earn interest on their savings while having more options to access their money. Rates are typically better than regular savings accounts and some offer rates more in line with high-yield savings account rates. Generally, money market accounts let you write a limited number of checks per month and additionally access funds with an ATM or debit card. Make sure to ask your bank about fees associated with their money market accounts before opening this type of savings account.
Certificate of deposit accounts are time deposits meaning you leave your money in the account for a specific period of time (the term that you choose at account opening). During the term you earn a specified interest rate that is typically higher than regular savings and money market accounts. If you withdraw your money during that set term, you will have to pay an early withdrawal penalty which is typically 3 to 6 months interest. Certificates of deposit accounts are best for money you know you will not need for the term that you invest it in.
Talk to your personal banker today to get more information on which savings account option is best for you.