You’ve heard “put your money away in a savings account to make your money work for you,” but which type of savings account? Did you know that there are different types? Here is a quick guide to three of the most popular and widely available ones.
- Traditional Savings Account: The most common and easiest to open. You will have access to the funds in case of an emergency. They will also earn interest to make your money grow. However, the interest rate may be lower than other options.
- Money Market Account: Like a traditional savings, this kind of account also has added features that you can find with a checking account, such as a checkbook or debit card. Money Market Accounts earn interest with better rates than traditional savings, but you will have to keep a higher balance in the account to earn the best interest rates.
- Certificate of Deposit (CD): This type of account usually comes with the best interest rates of the three savings accounts. However, with a CD you must leave your money in the account for a certain amount of time, and you cannot add funds to the account. Certificates of Deposit carry a penalty for early withdrawal.
