Is it time to add a savings account to your banking? We recently went over the benefits of having one, so here are a few different types of savings accounts to choose from in order to help you discover the best option for your needs.
Basic Savings Account
A basic savings account is exactly what it sounds like. This particular account is great if you just need somewhere to store your money, but know that there can be limits on withdrawals and transfers. Interest rates and other restrictions or benefits depend on the individual bank or credit union. This traditional option can be perfect for a starter account or if you’re still learning the ropes when it comes to banking.
Online Savings Account
An online savings account, on the other hand, is through an online-only bank, rather than a brick and mortar option. They tend to have lower monthly fees along with higher interest rates and no balance requirements. However, you should only choose this account if you’re confident you know how to handle most of your banking – there won’t be a teller to help!
Certificates of Deposit
Also known as CDs, Certificates of Deposit are a slightly different option. These require you to “lock-up” your money for a set period of time. They offer higher interest rates than other saving accounts choices, but if you discover you need your money before that period of time is up, you could be paying a penalty to do so. Some Certificates of Deposit types don’t include the penalty though but may have other restrictions, so carefully weigh your options and consider your money situation before opting for this savings solution.
Money Market Account
Money market accounts, or MMAs, are a sort of split between checking and savings accounts. This choice tends to come with a checkbook or debit card (or both!) and allows you to spend your money as you need. This is a great option for an emergency fund as you may still be restricted by the withdrawal limit but can earn interest on the amount.
Student Savings Account
If you’re a college student, you may be happy to hear that many banks and credit unions have savings accounts dedicated to you. These rarely have fees, making them a much more affordable option. Some will even waive the fee after you graduate until you land a position. If you do land a job (hopefully soon!) after graduating, you will be required to change it to a regular account.
Types of Savings Accounts: Which is For You?
Whatever type of account you choose, it’s important to do research into your options before doing so. One choice may work better for you now, but down the road five years, you may want to explore a different avenue. It all comes down to where you are right now financially! If you’re not quite sure, consider talking your options over with a bank to see what they offer and recommend.