Types Of Savings Accounts
Knowing what types of savings accounts to use can seem confusing. Saving money is not difficult. It simply means that you have put aside money to use at some point in the future or that you are in some way making use of present income in a way that will benefit you in the future. There are several reasons why someone might want to save money.
Some of the reasons why individuals might want to save money includes large purchases such as a car, or a down payment for a home. It may even include large saving plans such as for retirement or it might be for something small such as a TV or a some furniture. It can also be for college or other educational expenses.
Just as there are many reasons why someone might be inclined to save their money there are also a variety of types of savings accounts that you can use to go about accomplishing that goal. Usually the method and plan you choose is directly affected by exactly what purpose you have in mind for the money you are saving. Here are some of the methods you can use to save money.
Saving For The Future
The most common method for saving money is a savings account. This works for most money saving purposes, usually this type of an account allows you to access and withdraw money as well as provide you with the opportunity to gain interest on your balance. Depending on the account, you may need to keep a minimum balance in order to avoid service fees.
Interest bearing checking accounts are not as uncommon as you may think. In fact, they have been becoming increasingly popular. They offer a wide range of services including unlimited withdrawals, check writing, ATM access and often include online bill pay. They do however have a substantial minimum balance requirement.
Another option for saving money is to place your savings in what is called a money market insured account. This is used primarily for long-term savings such as retirement. It offers a much larger rate of return or a higher interest rate when compared to regular savings accounts. In this case the larger your balance the greater the interest rate.
There is also the option of placing your savings into Certificates of Deposit or CD account. This requires however that you lend your money to the financial institution for a specific period of time. This can be anywhere from thirty days to five years. The longer the period the higher the interest paid on the amount. This is considered an investment form of savings so it is important to check around for interest rates and terms as banks are not the only institutions, which offer this type of service.
It is important to consider the timing of your goals. How much time you have to save since this can change the way you save, and how you choose types of savings accounts that will work for you. You may want to encourage saving by preventing access to the money for a certain length of time or you may want to be able to access it when you need too. When you are looking into savings the decision of the right institution can make all the difference.
Post a Comment
Do you have a tip, suggestion or a story to add? Share it with us!
Back to Money Matters