- Why and how to save
- Why and how should I save money?
- Planned and unplanned expenses
- I am ready to save. What is the next step?
- Saving wisely: emergency fund
- Emergency fund
- Saving wisely
- Saving wisely: planned expenses
- Paying yourself first
- Pay yourself first
- Paying yourself first
- What are different types of savings accounts?
- What is interest and how does it work?
Learn about the different types of savings accounts.
Choosing a savings account
A savings account is a great way to save money, earn interest, and grow your wealth over time. But with so many different types of savings accounts to choose from, it can be tough to decide which one is right for you.
Consider your goals
First and foremost, consider your goals. Are you saving for a specific purchase, like a car or a house, or are you just looking to build up an emergency fund? Knowing what you're working towards will help you choose the right account for your needs.
Think about initial deposit requirements
Some banks have minimum initial deposit requirements for their savings accounts. If you're starting off with a small amount of money, this could be an important factor to consider.
Consider access restrictions
Different banks have different rules about how often you can withdraw or access your money. Some will let you withdraw from your savings account as often as you like, while others have restrictions on how many times per month you can access your funds. Make sure you understand the rules before signing up for a savings account so you don't run into any unpleasant surprises.
Finally, don't forget to shop around. Each bank has its own set of features and fees when it comes to savings accounts. Compare them to find the one that best suits your needs.
Traditional savings account
A traditional savings account is the most common type of savings account. Banks will usually offer you a small amount of interest for keeping your money with them. Interest rates are typically low, but these accounts are usually a great place to start, as they are easy to open and come with no fees.
High-yield savings account
A high-yield savings account usually offers a higher interest rate than a traditional savings account. This can be a good option if you want to grow your money faster, but there may be some restrictions, such as a minimum balance requirement or withdrawal limits.
Money market account
A money market account is a type of savings account that usually has a higher interest rate than a traditional savings account. You may be able to write checks from a money market account but these accounts may also have fees.
Certificate of deposit (CD)
A CD is a type of savings account where you agree to keep your money with the bank for a certain amount of time (a couple of months to a couple of years). In return, the bank will give you a higher interest rate. If you withdraw your money before the time is up, you may have to pay a penalty.
Want to join the conversation?
- could you explain more about the money market account? i couldn't understand.(5 votes)
- Companies need "short-term" cash (borrowing for only a few days or weeks). Banks are happy to loan out that kind of money, because they can make good interest on the loans. When you put your deposit into the money market, the bank loans it out on the short-term market and makes more on it, sharing a portion of that added income with you in the form of higher interest.(13 votes)
- thank you(7 votes)
- If we do withdraw money from a CD account before the set time period, what are some examples of the penalties?(3 votes)
- Let's say that regular savings interest was 1%, and your CD was earning 3%. If you retire early, everything above the 1% that you had earned on the CD would be taken back, and your original deposit would be treated as if it had only earned 1%.(4 votes)
- Is this best option if I had extra money and did not need it for awhile?(2 votes)
- If your extra money is enough to reach the minimum amount to get a certificate of deposit, and you are able to wait, that can be an excellent option. Talk to your banker.(4 votes)
- Money market accounts and high yield accounts I never heard of before in this manner. I thought high interest rates were always a bad thing.Also, I hate banks and are there other alternatives then using one to avoid issues with the law. Any open suggestions.(3 votes)
- What is the point in the nontraditional accounts, are they ways of disciplining your money or do the banks have to follow certain parameters through rules of operation?(2 votes)
- I am 16, I want to save my money for 2 years, will I be able to use a CD?(0 votes)
- A CD usually requires a minimum amount put into it. Ask this question at the local bank, credit union or other institution that offers it. How much can you, at 16, imagine to save before your 18th birthday? If that's enough for a CD, then nothing should stop you.(1 vote)
- This section is not for comments! Please only use it for actual questions.(2 votes)