Do you know what savings account is best for you? Is interest rate driving your choice? Are you thinking of saving for a short-term goal? Do you want to teach your child how to start saving? Depending on what you want, there are about three types of savings account which most banks offer which could help you achieve your purpose for savings.
Three types of savings account exist and most banks offer these savings packages. These are traditional savings account (TSA), money market account, and certificate deposit account. Each of these savings accounts has its benefits and purposes. Also, the three types offer interest rates, with the certificate deposit account having the highest interest rate.
How to Know if a Traditional Savings Account is Best for You
A traditional savings account is good for day-to-day or short-term financial goals. It offers interest and also, guarantee an opportunity for quick access to find. This offers a higher interest than checking accounts. The TSA has no limit to deposit or withdrawal amount, but its interest rate is lower than other savings account. It is ideal for ideal for, short-term savings, emergency fund, day to day savings, a vacation in a few months, or teaching your children to save.
Benefits of Money Market Accounts
Maybe a money market account is best for you if you are looking to invest towards a short-term goal. Money market accounts normally earn higher interest than traditional savings accounts, however, they require a higher balance; they also offer checks and cards for instant use. MMA’s usually require you to have at least $1,000 or more deposited, but you tend to earn more interest than you would with a traditional savings or checking account. Interest rates on MMAs are regularly higher due to the higher opening and minimum balance requirements. MMA’s are perfect for, short-term savings, emergency fund, day to day savings, a vacation in a few months, or teaching your children to save.
Do you want a savings account that wouldn’t tie up your money, yet with a high interest rate? MMA offers you such. Read more about MMA here.
Certificate of Deposits
This type of savings requires you to save your money for a particular length of type. Generally, the period of savings is usually between three months to 10 years. It actually ties up your money until the period of saving elapses. CD offers a higher interest rate than so TSA or MMA, but does not offer free access to withdrawal. For CD, early withdrawal before the liquidation date normally attracts a penalty or extra fee. CD’s are usually used for long-term savings, next year’s tuition, gift money for a child, part of your retirement savings, or future down payment.
Are interested in long-term savings or have a goal you want to save up for? Compare which savings account may be best for you depending on your goal.