A Savings Account is the easiest way to start putting away money for the future. This is by far the simplest form of investment vehicle you can use to tuck away that extra cash. But just like with Checking Accounts, not every account works the same or offers the same benefits.
Although a savings account is a safe way to store your money unfortunately with the economic state we have right now the interest rates paid are not anywhere near what they used to be. On the upside though they do offer the most convenience and easy access to your money anytime you need it.
Types of Savings Accounts
Now lets get into the thick of it; the Types of Savings Accounts available for your needs. Prior to choosing an account think over what your future plans are as well as how soon you’ll need to get your hands on your money which in the case of savings accounts is the most important aspect.
Traditional Savings Account – This is the entry level edition in the world of savings and is the most well known and most used option utilized by consumers. With a standard savings account or passbook savings you’ll be able to deposit money whenever you choose and withdrawal it whenever you want without worrying about penalties. Also usually you don’t need to worry about monthly maintenance fees or having to make large initial deposits. These accounts are all about convenience and quick access to your cash which is why they are such a crowd favorite.
Money Market Accounts – If your looking to earn more with your money you may want to consider a money market account which typically pays much higher rates of interest than a traditional account. However the downside to this type of account is the fact you’ll need to maintain a minimum monthly balance to avoid fees, will have more limited access to your funds and usually you’ll need to open the account with a much higher amount to get started. You’ll certainly enjoy the higher rates of return but ensuring you stay above your minimums is crucial as the monthly charges can easily eat into your savings; and you don’t want that!
Certificate of Deposit (CD’s) – Get ready for it! The CD or Certificate of Deposit is usually the savings account that pays out the most money. The reason for this is because unlike the other two options the CD requires your money to be “locked” into the account at a set rate of interest at a set amount of time which can be anywhere from six months to years of time. This type of savings is for those who plan to save for the long term as access to the money will not be an option until it matures. If you do need access to the money you’ll be expected to pay out penalties and fees for the privilege. CD’s do however offer a set rate of interest you can count on for the length of your investment. Also similar to money market accounts you typically will need to start off with a higher amount of money to open a Certificate of Deposit Account.
How to Select the Right Savings Account
To ensure you end up with the perfect savings account for you we suggest taking a few minutes to write down what are the most important factors when it comes to your savings goals first and then make your selection. For example do you want immediate access to the money at anytime or are you looking to save for a big purchase in the future? Thinking about what goals you have in mind before jumping in will save you many headaches and fees in the years to come.