The nostalgic clink of a full piggy bank has evolved for the digital age — and it’s time to take advantage of the various savings accounts available to modern workers and savers looking to make the most out of their hard-earned savings. But with the variety of savings accounts to choose from, it can be difficult to make a confident choice.
What type do you need? Which is the safest? Which gives you the most access to funds? Which will pay the most in interest? These are all valid questions, especially when you’re looking to open an account today to reap the most in future savings. Let’s take a look at the 9 most common savings accounts and what they can do for your money.
1. Savings deposit accounts are interest-bearing that allow you to withdraw money anytime for up to 6 transfers per month. This is what is considered to be a “normal” savings account.
This might be for you if: You want the simplest solution to storing money and earn interest.
2. Money Market Accounts (MMAs) are similar to normal savings accounts but allow you to withdraw money using checks and sometimes even debit cards. The deposit and balance requirements are higher than normal savings, as is the interest.
This might be for you if: You want to save a lot of money but want access to it all.
3. High-interest savings accounts pay higher-than-average interest, or “yield” — but a high minimum balance, among other things, is required to earn that interest.
This might be for you if: You want to save a lot of money but only need access to some of it.
4. Club savings accounts offer incentives for things like maintaining a minimum balance or reaching certain savings levels geared toward your goals.
This might be for you if: You like having a savings goal and don’t mind a slightly lower interest rate.
6. Student savings accounts are made for high school and college students and can feature lower minimum balances and more flexible terms.
This might be for you if: You are a student who wants to save money.
7. Certificates of deposit (CDs) pay more interest than an average account but do not allow you to withdraw funds for a specified amount of time (anywhere from a month to 5 years) without penalties.
This might be for you if: You want to put a specific amount of money aside to grow and do not need access to it.
8. College savings accounts (529 plans) are accounts used to save money for a child’s higher-education expenses. They aren’t tax deductible but won’t be taxed upon withdrawal as long as the money goes toward higher-education expenses.
This might be for you if: You want to start a savings plan for your child and don’t plan to do anything with the money other than pay for college.
9. Individual Retirement Accounts (IRAs) are government-sponsored, tax-deferred accounts into which you can make deposits and manage investments to best grow your money between now and retirement.
This might be for you if: You want to plan for retirement by putting money aside now and allowing it to grow untouched until you reach the retirement age.
Whether you have questions about an upcoming financial decision or just want to be more educated on the path of your money within the banking system, you need a crash course in financial education using sound information and advice. Common Trust Federal Credit Union understands your concerns and offers our Financial Education Center to help you best understand and prepare for new life milestones. Get started today!