Welcome to 2020! A new year and new decade offer new chances and a new start for people. In fact, 28% of Americans said that they have a New Year’s Resolution. Of that 28%, 49% made saving money their goal. The best way to keep a New Years Resolution is to make a goal for exactly what you want and stick to the plan. We have made a list of the most common savings account types and how they work so you can make the decision on which is best for you.
A deposit savings account is the most basic savings account and is usually the most popular. It requires a small minimum deposit and generally has low fees if the minimum balance is kept in the account, though transaction fees may still apply. This account is a good option if you are just starting to save money because the funds are liquid, and you can access them whenever you need to. These accounts can also be linked to an ATM card. If you also have a checking account, you can link your savings account to your debit card as well. The downside of this account is that it usually has the lowest interest rate.
Another option is a Money Market Savings account. This is an account with a higher interest rate but will require a higher minimum balance required. Like the deposit savings account, the funds are liquid. Most people with an emergency fund will use a money market to hold their funds because they can access it any time and receive a better interest rate.
The last account is called a Certificate of Deposit (COD). This is the account with the best interest rate; however, the funds are not liquid at all. The funds are locked in for a certain period ranging from 30 days to 60 months. People do have the option of using the interest earned before the COD matures or adding it to the balance of the COD and earning interest off it as well (compounding interest). This account is a nice option for people who don’t plan to use their funds and can earn the most interest.
With the new year and new resolutions kicking off, make sure you are armed with the knowledge to make the best decision to make your goals a reality. A friendly GSB face is only a call, click, or drive away and we are always happy to answer any questions you have!