Savings Accounts

The Types of Savings Accounts Available

 

We are all interested in saving money for the future. Whether you dream of eventually buying a home or you instead need to replace an old vehicle, liquidity is always essential. There are numerous means by which these and other desires can be realized. While most of us have checking and debit accounts, savings accounts are another viable option that should never be taken lightly. Still, many consumers are aware of their benefits as well as the different available options. Let's take a look at the basic intentions of a savings account before examining the different varieties offered by banks across the United States.

 

Why Choose a Savings Account?

 

As the name already suggests, any money placed within this account is generally meant to be used as a nest egg as opposed to being a source of financial liquidity. Credit and debit accounts are better suited if you want to withdraw cash on short notice. There are two main differences between the average savings account and other variants:

 

  • A savings account will accrue higher levels of interest over time.

  • The minimum balance tends to be slightly higher when compared to checking and debit accounts.

 

It is important to point out the benefits associated with higher interest rates. Higher levels of interest essentially signify that you can earn a greater return on any money found within the account. More funds equate to more residual income over time; a massive benefit in terms of saving for the future. Still, keep in mind that the main goal of a savings account is to save money, so only choose one if you are relatively certain that you will not require these funds in the near future.

 

What Types of Accounts Are There?

 

Besides basic savings accounts, many institutions offer you the possibility of opening up a solely online account. There are several benefits associated with this option. First, you can access your information within seconds. Minimum balances will generally not apply and the levels of interest (APR) tend to be higher than those associated with traditional savings accounts. Robust levels of security ensure that no prying eyes will ever gain access to your personal details.

 

Money Market Accounts

 

At first glance, a money market account will not appear much different than a savings account. The main disparity is that you can access your funds more easily. Thee accounts can also be used to write checks or pay bills. However, there may be limitations in regards to how much you are allowed to withdraw each month. These are an excellent option if you are looking for an emergency source of liquidity while still earning more than an average checking account.

 

Certificates of Deposit (CDs)

 

Certificates of deposit function in the same way as normal savings accounts with one notable exception. The money needs to be locked away for a set period of time. This can range from six months to five years or more depending upon your preferences. However, it is still possible to withdraw these funds early in the event of a sudden emergency. The trade-off is that you will be charged a penalty. This penalty is always made clear from the very beginning. In other words, a CD savings account makes sense if you are relatively certain that you will not need to access the money throughout the duration of the contractual agreement.

 

Choosing the Best Option

 

We have just listed the major types of savings accounts. Still, never forget that the bank will have a great deal to do with your overall levels of satisfaction. If you do a significant amount of traveling, it is a good idea to select an institution which is available from state to state (such as Capital One or HSBC). Always read the terms and conditions carefully before making any type of commitment. What types of customer service are offered? Are there any stipulations within a savings account that are not appropriate for your needs? Will you be provided with online access? Can you use your existing bank to open one of these accounts? Appreciating these and other metrics will help you to make an educated decision. If you are looking to have your funds work for you, a savings account is a great option to consider.

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