Savings accounts allow you to deposit, withdraw, and earn interest on your money.
A savings account is a safe place to put money aside for a future goal or for unexpected expenses. When you put your money in a savings account, the bank rewards you by adding a small amount of extra money to the account on a regular schedule. This is known as interest. As a result, your money grows.
That’s why it’s a good idea to set aside as much as you can in your savings. The amount of interest you earn will depend on which account you choose and the amount of money you keep in the account over time.
While savings accounts are a good place to set aside money for the future, keep in mind that many savings accounts limit how often you can take your money out. So for paying your monthly bills or making day-to-day purchases, checking accounts are a much better choice.
Which type of account is right for you? Well, it depends on a few things, like your income, your budget, and your reasons for saving. You may even want several accounts … maybe a regular savings or money market account for your basic saving needs and Certificates of Deposit for college tuition or the down payment on a house.
There are several kinds of accounts that can be used for saving. Three of the most common are regular savings, money market accounts, and Certificates of Deposit, or CDs. Ask for details where you bank. Many banks offer websites that can assist you.
Remember these key points about savings accounts.
A safe place to set money aside for future goals and large expenses
A good place to set money aside for an emergency fund