Savings accounts may be used as safe places to save money that you don’t expect to spend straight away. It is a great way to keep managing and achieving your long-term goal. We are here to explain various kinds of saving bank accounts. This can help you choose the saving account which fulfills your requirements.
Types of Saving Accounts
Regular saving account
- If you are in a situation where you have a certain sum of money and would like to keep it safe then opening a regular saving account is the solution. This is for the people who are not looking for earning a significant amount of interest from their deposit. This is mainly for people looking for an easy way to put their money safely aside. Every bank offers this service.
- The minimum amount to be maintained by these accounts is the least among others. But it comes with its drawback. They offer far less rate of interest. Additionally, the number of times you can withdraw money from an ATM is significantly low. It could be as Low as 4 times a month. Any withdrawal above that will incur charges.
- Being one of the most basic in the category almost all the services such as account maintenance, ATM cards, and cheque book are chargeable. The fees you could be paying annually for the services could end up being more than the interest earned on your deposit. Hence only people who should be considering this is the one who simply wants a place to deposit their saving without using any other bank facilities.
High-yield saving account
- Want to increase your wealth without investing or incurring bank fees? This is the one for you, then. This account provides a much higher rate of interest on your deposited sum. Also, the overall maintained charges are lesser as compared to the previous one.
- Usually, these account types are available to open online rather than through a bank branch. Due to this, you cannot directly deposit your money into an account at the branch. This account doesn’t permit branch banking. Due to their online nature, their maintenance fees are minimal.
CD account
- CD stands for certificate of deposit. Basically in this, you agree to deposit some amount for a fixed duration of time. During this time you earn higher interest than a regular savings account. But you are not allowed to withdraw during that period. If you withdraw you lose a major chunk of your interest earned. These accounts can be operated online as well as from the branch.
- On completing the decided period you have two options. Either withdraw your money and transfer it into your regular saving account, or re-deposit that amount for an additional period. These accounts don’t have monthly maintenance. Also be it for the short term or long term, CD offer higher interest rates.
- One major drawback is, on withdrawing money before the end of tenure will attract penalties. Also, the interest rates are decided at the beginning. This means, even if in future the rate of interest increases you will still receive the rate which was determined at the time of opening your CD.
Cash management account
- Regular investors require access to their funds at all times. This facility is made for those people. This service is not provided by a bank; rather, mobile trading applications or online investing companies do it. The major purpose of this is to encourage all of the users to save and invest money using the same platform rather than jumping between applications and various trading and saving accounts.
- They even provide you with a cheque book and a debit card. Apart from that they also provide similar facilities a bank provides. These include direct deposit, bill payments free ATM network etc. The majority of the time, the business makes money off of your investing account by taking a percentage of your transactions.
- This account is only for those who like to keep and manage all their money in one place as well as who is comfortable with mobile and Internet banking.
Special saving account
- Specialty savings accounts are designed to help you accomplish specific savings goals rather than acting as a holding account for money you don’t plan to spend. They are designed for a certain kind of individual. For instance, there are several kinds of savings accounts available to kids. You might open one of the following three types of savings accounts on behalf of a kid or teen:
- Kids’ savings accounts
- Custodial savings accounts
- Student savings accounts
- These accounts have restrictions in terms of who can open them. Also, the interest rate is relatively lower as compared to others.
Bottom line
It’s crucial to keep in mind that you don’t have to select just one savings account while picking one. You could choose to open many savings accounts, CD accounts, high yield, or specialty accounts, depending on your financial goals. Hence it is essential to figure out your requirements before opening an account. If you wish to know about other kinds of accounts you can open then you can click here.