What is a savings account?
A savings account is a basic type of bank account that allows you to deposit money, keep it safe and withdraw funds. Savings accounts offered by most banks, credit unions, and other financial institutions are FDIC/CDIC insured and typically pay interest on your deposits.
Is a savings account good long term savings goals?
Savings accounts do not pay a high rate of interest on deposits. They are a good place to save for short-term goals or keep cash for emergencies. Once you’ve built up some savings, look at other options for making your money earn more.
What are Money market accounts (MMAs)?
Money market accounts look and feel like savings accounts.
With a savings account, you usually have easier access to your cash. You can often write checks against the account and you might even be able to spend those funds with a debit card. However, there are usually limits on how many times per month you can make withdrawals.
Money market accounts often pay more than savings accounts, but they may also require larger deposits. They are a good option for emergency savings because you have access to your cash, but you still earn interest.
What is a Certificate of Deposit (CD)?
A CD is also similar to a savings account, but CD’s usually pay more interest than savings accounts. With a CD, you have to lock your money up for a certain amount of time (6 months or 18 months, for example). While it is possible to withdraw funds early, you’ll have to pay a penalty to do so, so CDs only make sense for cash that you won’t need anytime soon.
Can you write checks on a savings account?
If you really need access to your cash and you still want to earn interest, you might get what you need from a savings account that allows you to write the occasional check.
What is a student savings account?
Some banks offer “student” savings accounts with reduced or no fees. Remember, the account may convert to a “regular” account at some point, and you’ll need to be mindful of fees after that conversion.