For those looking to save their money, there are several unique types of savings accounts from which to choose. Traditional savings accounts, money market accounts, and certificates of deposit all need to be considered before making your choice.
Traditional Savings Accounts
This is a common savings account that almost all banks offer. It's easy to obtain, and you may not need a minimum balance in order to maintain it. If you do need to keep a minimum balance, it's generally a lot lower than other types of savings accounts.
When you first open a savings account, you have to make an opening deposit which is your first deposit of money to the account. The amount you need to deposit is generally lower than what is required for other savings accounts. As for fees, accounts that require a minimum balance will charge you if your money drops below the required amount.
One of the disadvantages of a traditional savings account is its extremely low interest rate. This type of account won't make you a lot of money over time. You also usually won't be able to write checks with this account.
This type of savings account is used to keep your money safe, to have money available in an emergency, and it can add extra protection to your checking account if you overdraw.
Money Market Accounts
This particular type of savings account is similar to a traditional account, but it has a few key differences. For instance, the minimum balance requirement is generally going to be significantly higher. One of the main advantages of this type of savings account is the fact that the interest rate is much higher than traditional savings accounts. Because of this, you can expect to make more money.
Another difference is the fact that you won't be able to withdraw money from this account very often; it's restricted. Money market accounts will allow you to write a few checks per month, though. This type of savings account is used when you want to make a good bit more money from your savings, and it's used to keep money safe, as well. It's also for people who want a little more freedom since you can write checks.
Certificates of Deposit
This type of savings account is used to keep money safe, and it has high interest rates to help you make more money. These high interest rates come with restrictions, however. CDs have a maturity date. This means that you can't touch the money until a certain amount of time has passed. If you do withdraw the money before then, you will suffer a hefty fee. A certificate of deposit is what you should invest in when you know you won't need to use the money for a while.
Savings accounts are a great way to protect your money and earn a little extra at the same time. Depending on your needs, you should either choose a CD, a traditional savings account, or a money market account.
