For a few people, saving is not a difficult task, but it becomes a very tedious job for most. In an era where people are so busy in their lives, they hardly have time to save their day’s earnings.
Indeed, saving it up to the right amount is the real hard challenge. That is why there are different types of saving accounts available at banks. This blog will introduce you to some of the most popular of them.
Popular Types Of Savings Accounts
This option is a deposit offered by banks and credit unions to consumers. Initial deposits are typically small, with maximum fund withdrawal capped per month (may vary depending on the bank’s regulations).
These accounts typically have a small interest earned on saved funds, usually at just 0.01% per year. They are suitable for people who have a small amount of money to save.
The main benefit of having this type is that your deposit money will be available whenever you need it. That’s why such types are also known as cash accounts.
Money market (MMA)
MMA is the combination of a savings and checking account. It offers reasonable interest, a certain amount of flexibility, and some security.
For example, a standard money market will require a minimum balance, usually $1,000. This account will also provide a checkbook and debit card at an ATM.
Certificate of deposit (CD)
A certificate of deposit, commonly known as CD, is a form of deposit where the depositor does not control the money for a specified period of time. The period could be three months, six months, one year, two years, and even five years.
The depositor receives a high APY in return for having no use of the money for a specified period. Banks and other financial institutions offer them. This option protects the investment from market volatility.
Other Saving Accounts You Might Concern About
High-Yield Savings (HYS)
An HYS offers higher interest rates than traditional types and is often FDIC-insured. It is typically available through online banks and credit unions.
Unfortunately, some HYSs require a substantial minimum deposit to open. Still, in general, the more you’re able to deposit upfront, the higher your interest rate will be.
Cash Management (CM)
CM combines features of both a checking and savings type. It has the check-writing capability but also offers savings-like interest rates. A CM is ideal for people who often keep cash on hand and want account security that can’t be overdrawn.
Specialty savings target a specific group of people. In other cases, these options can be a way for a bank or financial institution to describe how each type is intended for specific users.
Which Type Of Account Has The Highest Interest Rate?
So with the six options mentioned above, which type of account will typically have the highest interest rate?
The answer is a CD. It allows you to receive interest on your investment when you leave it untouched for a specified amount of time.
The nice thing about CDs is that they usually don’t require any active maintenance, making them a great option for customers looking for the easiest way to save money while earning more in their bank accounts!
We hope this article has given you a new perspective on your saving plan and the potential savings you can achieve by opening a savings account.
If you are concerned about making ends meet right now, a saving plan can help you get out of financial troubles or prepare for a rainy day. Feel free to contact us if you have any more questions about this topic.