Saving money is really important, especially when you lose your job or fail in your investment. Therefore, opening a savings account can be necessary and helpful. While there are all kinds of savings account available, you should understand the features of different types of the account and make your own choice. Here are 3 common types of savings account introduced for you.
Basic savings accounts
Basic savings accounts are generally provided by banks or credit unions. You can put the deposit into the account, get the interest, and withdraw the money if need be.
A basic savings account has a relatively stable value and it is protected by the Federal Deposit Insurance Corporation (FDIC).
Basic savings accounts usually have full liquidity, which means you can take your money out of the account at any time without notice in advance.
However, sometimes there will be transaction limits. In most cases, you are not permitted to transfer the funds over 6 times each month.
Money market accounts (MMAs)
Money market accounts share the same features of the basic savings accounts. Yet additionally, you are allowed to write checks and spend the funds by using a debit card.
In some cases, the interest of a money market account is higher than the basic savings account, but you will be required to keep more funds in the account.
Since a money market account provides easy access to the cash and helps earn interest, you may find it a good choice if you want emergency savings.
Certificates of deposit (CDs)
If you are quite sure that the money to be stored won’t be used for a long time (several months or even years), a certificate of deposit may be your best choice.
With a CD, you can earn more interest than a basic savings account. Typically, the longer your money is kept in a CD, the more interest you can earn.
However, once you take the money out before the end of the term, you will be required to pay a penalty.