While many banks might offer a variety of different savings options, most will offer three basic kinds. As you are deciding which kind of account you want, ask yourself how much money you want to save and how often you want access to that money. Then do some comparison shopping, paying special attention to the fees and interest rates associated with each account.
Basic or Regular Savings Account
This is probably the most common type of savings account, and the simplest to use. You can usually open a basic or regular savings account, sometimes referred to as a “passbook account,” with a small amount of money. This type of savings account will typically have no minimum balance requirement, or a low one, and they will provide you with easy access to your money, though you might be limited to how many withdrawals you can make per month without being charged a fee. This type of savings account often offers a low interest rate, so if you’re looking for a higher return on your money, you might want to investigate another type of savings account or look into investing.
Money Market Account
With a money market account, you will often receive a higher interest rate than you would with a basic savings account - and the interest rate can change as the economy changes - but you may also have to keep a higher minimum balance (the amount differs from bank to bank). You will still have easy access to the funds in your account, though the number of withdrawals you can make will probably be limited. In addition, you may have the ability to write checks, but the number you are allowed to write will also probably be limited.
CD (Certificate of Deposit)
This type of savings account is a little different because you have to leave your money in the account for a specific amount of time, which varies by bank and type of CD, before you can have access to it. If you take money out of a CD before its maturity date, you will likely have to pay a penalty. CDs will typically offer a higher interest rate than other types of savings accounts and will often be fixed. Because of this, CDs are also considered a simple and straightforward form of investing.
For information on other types of investments, click here.