![]() The benefit? High interest rates - up to three percent annually. If you need to withdraw early, you’ll pay a penalty fee. You can set this to be anywhere from three months to five years, so choose wisely. Certificate of DepositĬertificates of deposit, or CDs, are a type of savings account that comes with a fixed withdrawal date. Consider talking with a financial advisor to ensure you’re choosing the account that’s right for you. ![]() Diversify your savings by keeping an eye out for which accounts have the best interest rate and lowest fees. Most people opt for traditional savings accounts at their national or local bank, but you don’t have to limit yourself to just one option-there are also high-interest savings accounts and money market accounts. Now that you understand the importance of having a savings account, it’s time to decide which type of account is right for your needs. Alternatives to Traditional Savings Accounts Most large banks offer mobile banking, and you can even consider setting up auto-transfers so you can save without even having to think about it. If you get a checking and savings account with the same bank, it’s usually easy to transfer money between the two accounts. While most national and local banks offer relatively small interest rates averaging at just 0.06% annually (with most large banks at just 0.01%), you can look into alternative options to traditional savings accounts like money market accounts and certificates of deposit that offer a slightly larger return on investment. This is because your money doesn’t just stay stagnant - banks lend it out and make money by charging interest on the money borrowed. GrowthĪll savings accounts offer interest payments on your balance. They’re a great low-risk option because they’re federally insured, meaning if the bank fails, you’re covered up to $250,000. Savings accounts, on the other hand, offer safety and stability. Stockpiling cash subjects your money to theft and damage. If you’re going to start diligently portioning part of your income to savings every month, you should consider finding a savings account that helps you keep your money safe, is easy to use, and grows your money with accruing interest. There are a variety of options when it comes to savings accounts which we’ll cover in this guide. A savings account is specifically dedicated to funds you want to stash away for the future. See How Useful a Savings Account Can BeĪ savings account allows you to deposit your money with a financial institution, while also giving you a certain level of return on your account balance.Practical Uses for Your Savings Account.Alternatives to Traditional Savings Accounts.For an overview, keep reading or use the links below to go straight to a specific section. We’ll also point out some of the restrictions and fees you should be aware of before you choose. In Chapter 3 of our savings series, we’ll cover how to choose a savings account, how to go about opening one, and the options for how to utilize yours. Whether you’re saving for a plane ticket or house down payment, or need easy access versus wanting to stow cash away untouched, it’s important that you do a little research to find a savings account that’s right for you. A savings account is a secure place to store your money that earns a small percentage of interest annually while your funds grow towards your long-term financial goals.Įveryone’s savings needs are different. For most people, that’s a savings account. ![]() In Chapter 2, we discussed how much you should put away from each paycheck instead of spending it all as part of your savings strategy, but once you start doing that you’ll need to have somewhere to keep it. ![]()
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