Types of savings accounts

AlexAre you saving money for anything special? I’m saving for my own computer. It’s going to take some serious saving to get there, but I’m saving! The money keeps adding up!

Computer

Banks offer several types of savings accounts. My savings are in a regular savings account at the bank. I earn interest that’s paid every month.

Remember these key points about regular savings accounts:

  •  Interest is paid monthly
  • The bank may require a minimum deposit (money you give to the bank)
  •  May have limits in the number of deposits and withdrawals you can make

Remember these key points about certificates of deposit (CDs)

  • Your money must remain in the account for a fixed period of time (term).
  • The more money you deposit, and the longer you keep it in the account, the more interest you’ll earn.
  • You’ll have to pay a penalty if you withdraw your money before the fixed period of time.

AlexAnother safe savings account is called a certificate of deposit, or a CD. Your money must stay in the account for a fixed period of time — also called a term. But in return, you’ll get a higher interest rate than you would with a regular savings account.

And finally, there are money market accounts. They’re really savings accounts that allow you to write a limited number of checks. You’ll get to know about checking accounts in a bit, but for now, just know that money market accounts generally have higher interest rates than regular savings accounts.

Remember these key points about money market accounts:

  • A savings account that allows limited check writing
  • Limited withdrawals each month
  • Higher interest rates than regular savings account

Click the Next button to learn about opening a savings account.