A savings account is a bank account that earns interest – the amount of money a bank pays you to keep your funds deposited there. Banks and financial institutions offer several different types of savings accounts. Here's a quick review of the most common.
Basic savings account
A basic, or traditional, savings account is something to consider if you're looking for quick access to your money when you need it.
START HERE: Shop and compare interest rates. Then look for an account that offers easy access to your money, especially through online and mobile capabilities. Finally, check that the account features Federal Deposit insurance.
Certificate of deposit (CD)
CDs may offer a higher interest rate than many traditional savings accounts, but you'll have to keep your funds in the account for a predetermined amount of time. Generally, the longer that time, the higher the interest rate.
START HERE: Besides shopping for the best rate, see how long you'll have to keep your funds on deposit and make sure you're comfortable with that time frame. And check what kind of penalty you'll pay for early withdrawal, if any.
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Money market savings account
In return for a higher interest rate, money market accounts often ask you to keep a higher minimum balance than other types of saving accounts.
START HERE: When shopping for a money market account, find out the minimum balance, and whether there is a waiting period to make a withdrawal. Some accounts also offer you the ability to write checks directly from the account. Lastly, don't confuse money market deposit accounts with money market funds, which are considered investments and aren't insured.
Do your homework
This is just a brief overview of savings accounts. If you're looking to deposit money in an account that will earn interest and help you save for the future, be sure to investigate the possibilities and find the account that works best for your goals and needs. Working with an independent financial advisor can really help you make the right investments for your future--and might be a great second step.