Learning how to put money aside to save for the future can be both challenging and exciting. There are many different savings account options, from high yield savings accounts and money markets to accounts with minimal balance requirements and certificates of deposits. Savings accounts are designed to give you a designated place to deposit money and earn interest each month, but each has distinct differences from the others, depending on your savings needs.
Once you learn to understand the difference and the benefits of each account, you are well on your way to creating a long term savings plan that will help you create financial stability for years to come.
Understand your savings account options
- Traditional savings accounts: Traditional savings accounts offer you interest without requiring a large initial investment or a long term commitment of funds. There are traditional savings account options designed to boost savings for a specific purpose, such as college or home purchases, and there are also general accounts designed to help you manage a budget or create an emergency savings account. While the rate of interest savings may be a bit lower on traditional savings accounts, they offer the greatest level of flexibility and access to cash. They can be the perfect option for those just beginning to save or who are saving for a specific goal.
- High yield savings accounts: If you are looking to earn top dollar on your savings, high yield savings accounts give you the opportunity to earn interest at higher savings rates. There are high yield savings account options designed for both short and long term savings plans – each offering different benefits to your personal savings plan.
- Some of the most well known high yield savings options are certificates of deposit and money market accounts. Certificates of deposit (CDs) can fit well into a short term savings plan, because they are offered at varying commitment levels, and you can also find breakable CDs which allow you to withdraw funds once without a penalty. Many people like to work a CD laddering structure into their long term savings plan as well, investing portions of savings into CDs that mature at different times and offer different savings rates. Money market accounts can provide competitive rates with even more flexible withdrawal options than CDs. Many of them have minimal balance requirements for maintenance fee avoidance, but they often give you access to your funds multiple times every month. Plus, with a money market account you can make regular contributions and watch your savings grow.
To get started with your personal savings plan, take the time to meet with a banking representative and explore your options. By accumulating a little knowledge and putting together a well thought out savings strategy, you can maximize your money – earning more on every dollar you save.
Sponsored content was created and provided by RBS Citizens Financial Group.