There are so many different types of savings accounts available today that is can be hard to keep track. Unfortunately, many people are actually choosing the wrong ones.
If you are trying to build a substantial savings, saving for a trip or trying to earn interest from your savings, then I have got everything you need. Keep reading to find the best savings accounts to choose from and you can even get one started today!
*This post contains affiliate links. While I may make a commission please know all recommendations are my own.
A traditional savings account is what you will find at your local bank. This type of savings account can be helpful to have especially if it easily links to your checking accounts. Most banks will also allow you to protect yourself from over-drafts by linking to your savings.
The interest in a traditional savings account is usually below .06% which doesn’t end up being very much at all, but depending on your needs, this may not matter.
Think of a CD as a way of stashing your cash away for a rainy day. It is the ultimate hands-off saving method. What you do is get a large sum of money together (usually $1,000 minimum) and put it into a CD where it will collect interest. These funds will then sit there collecting interest for up to 5 years.
With a CD, you will gain interest up to 2.5%. There are no monthly fees and they are fairly easy to set up.
*While most CDs will penalize you for withdrawing funds early, there is an 11 month option that has no penalties!
When it comes to opening a high yield savings account, the best method is to use a trustworthy online source or go through a local credit union. These options are more likely to give you a higher interest rate.
A high yield savings account is similar to a traditional savings account with the exception that you stand to gain more interest. If you are hoping to get one started online, the minimum amount to open an account is $100 .
What does daily compounding interest mean? Daily compounding interest is an awesome feature in that you will gain interest on your interest!
For example, if you open a high yield savings account with $1,000 in it, you will not only gain interest on that $1,000 but on any additional interest you make as well.
This is the best way to get the most for your money.
Like a high yield savings account, a money market account will give you a higher interest rate than a traditional savings account. You are also more likely to receive a higher interest rate if you go through a local credit union or an online bank.
While you actually stand to earn more interest than a high yield or a traditional savings account (around 1.85%) you lose the luxury of frequent withdrawals and deposits.
*Check out this money market calculator to see how much money you stand to earn.
Take your time to go over the pros and cons of each and consider your unique financial situation. If you don’t have a big savings built up yet, a traditional savings account may be the best way to get started saving.
Perhaps you have a larger amount that you still want access to, then I suggest weighing the difference between a high-yield and a money market account.
Lastly, if you have a larger sum of $1,000 or more, (perhaps from taxes) but you have a terrible history of spending money too fast, I would recommend looking into a CD. It’s a great way to force yourself to save money and gain interest.
The idea of multiple savings accounts is becoming more and more popular and personally, I think the idea is genius! This can be a little trickier to figure out, but here are some of my top recommended combos:
Opening any of these accounts is a rather quick and painless process. For a traditional savings account, I recommend making an appointment at your local bank in order to get set up with an account that works for you. You can also talk to your bank about setting up a CD. Before you commit to anything, be sure to compare interest rates from different banks and from online banking sources.
As I said before, when it comes to a high yield savings account or a money market account, your interest will most likely be higher if you go with an online source or a credit union.
Browse all available online options for CD, high yield savings and money market savings.
Renee is the blogger behind The Fun Sized Life. After downsizing with her family, she also took the time to get serious about he finances. Now she is sharing the wealth with all of her readers.