Types of savings accounts: Where to save your money


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The decision to build your savings is a big step toward a better financial future.

The savings you create could help you reach any number of life goals, including saving up for a down payment on your first home or building a financial runway to start your dream business. These two goals could not be more different. Although many goals require that you save money, the best account to save that money within will vary dramatically.

As you take this step toward your financial goals, the type of account you choose to save your money in will depend on your unique preferences for safety, returns, and liquidity. With that in mind, we will take a closer look at your best saving options.

1. Regular savings account

The most basic place to save money is in a regular savings account that you can open at many well-known banks. With a basic savings account, you can set aside money for all types of savings goals. These accounts are federally insured up to $250,000 and will allow you to earn some amount of interest on your funds.

Basic savings accounts offer the promise of liquidity (i.e. easy access to cash) to accountholders. You’ll have peace of mind knowing that you can make up to six withdrawals per statement cycle to pull out funds for anything that you need.

The interest rates associated with basic savings accounts are generally fairly low compared to other savings vehicles. However, the account offers a relatively safe place to park your money for easy access in the future. It could be the perfect place to store your emergency fund or any savings for short-term goals.

If you’re considering this option, then take the time to shop around your local banks and credit unions. It is possible that you’ll be able to find a basic savings account that will meet your needs with an attractive interest rate.

2. Online savings account

A brickandmortar financial institution isn’t the only place that you can shop for a savings account. In fact, online savings accounts offer an accessible way to manage your savings from your smartphone or computer anywhere in the world. 

Although you may have your doubts about online savings accounts, they can be a great vehicle to help you work toward your savings goals. 

Not all online savings accounts offer stellar yields, but you’ll have the same promise of liquidity that you would get from a traditional savings account. With up to six withdrawals per statement cycle, you’ll have plenty of opportunities to access your savings should the need arise. If you seek out online savings accounts from banks with FDIC insurance, then you will also be able to protect your money. 

If you’re comfortable managing your money online, this is a great option. You’ll have liquidity and safety without creating an additional errand of running to the bank on a semiregular basis. 

You can find out more about the top online savings account on our regularly updated resource.

3. High-yield savings account

Although a traditional savings account might offer a higher interest rate than a checking account, a high-yield savings account can potentially have a much higher APY. With a more generous APY, you stand to enjoy the benefits of growing your funds without forgoing safety and liquidity. 

With a high-yield savings account, you can still make up to six withdrawals per statement cycle. Plus, if the account is FDIC insured, you’ll know your money is safe even if the financial institution runs into trouble.

If you’re interested in opening a high-yield savings account, then take a minute to check out the best interest rates available.

4. Student savings account

As a student, you have the option of opening a student specific savings account or any of the other savings account options. The benefit of opening a student savings account is you’ll usually enjoy lower monthly balance requirements and additional perks that make your financial life less stressful.

While you shop around for a student savings account, you might find that your options are somewhat limited for this account type. Many banks and credit unions offer student checking accounts, but the student savings accounts are more difficult to find.

If you’re struggling to find a student specific savings account, don’t worry. You can still find a savings account that will work for your needs. There are some savings accounts that allow you to build your savings without any monthly fees and with a relatively high APY.

One example of a savings account that could work well for students is the BrioDirect High-Yield Savings Account. With no monthly fees and a high yield to grow your money, it could be a good spot for you to manage your savings goals.

5. CDs

A certificate of deposit, or CD, is another way to build your savings. Because you’re tying your money up at a bank for a specific period of time, you’ll enjoy a higher APY than you would with a traditional savings account in most cases. However, you’ll lose the liquidity, or the ability to withdraw funds penalty-free, that makes regular savings accounts so attractive.

As you shop around for a CD, you’ll notice that a longer term, such as a 5-year CD, can translate into a higher yield. However, the tradeoff is you’ll have to agree to leave your money untouched for a specified period of time. You could find yourself leaving these funds locked up for five years or longer. You’ll know these funds are safe if they’re FDIC insured. However, you won’t have access to them for the length of the CD’s term.

Based on the lack of liquidity, a CD is a good place to save for longer-term goals. However, it’s not the best place to store your emergency fund or any money that you might need to access in the short-term.

6. Money market accounts

Money market accounts offer a safe place to store your savings while taking advantage of relatively high yields. In fact, many of the top money market accounts are offering APYs around 1.70 percent.

Like many savings products, the funds in your account can be insured by the FDIC for up to $250,000. Unlike most savings products, your funds might be easily accessible via a debit card or physical checks.

Although there are still limitations to the number of withdrawals you can make in a given cycle from this account due to a federal mandate, you have more flexibility than a traditional savings account or CD.

As you look to set up a money market account, you may notice that there are often high account minimums associated with these accounts. With that, the product might be a better choice for a veteran saver with ample funds looking for a smart place to stash their emergency fund.

7. Savings accounts with automatic savings features

If you need a little bit more help when it comes to saving, you have other options. Some banks will help you save more by rounding up your transactions to the nearest dollar and transferring the difference directly into your savings account. Others will help by automatically transferring some of your pay into your savings account with each paycheck.

Although these actions may seem small, they can add up quickly over time. You might be surprised at how fast you can build up a healthy savings account balance after consistently using these features.

A few of the top institutions that offer these unique accounts include Chime and Current. Take a minute to explore these options if you need some extra motivation to kick-start your savings goals.

Bottom line

The savings vehicle you choose will allow you to better propel yourself  toward your savings goals successfully. As you explore your savings options, take the time to think through your needs. Do you value security and liquidity? Or are you looking to secure the highest APY regardless of your access to the funds?

Be honest with yourself about your savings goals and your current financial situation. Start by building an emergency fund that you can easily access. Then work towards other savings goals with the account that best suits your needs.

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Written by
Sarah Sharkey
Contributing writer
Sarah Sharkey is a contributing writer for Bankrate. Sarah writes about a range of subjects, including banking, savings tips, homebuying, homeownership and personal finance.
Edited by
Banking editor