A great place to keep store your money away to earn interest is in an Savings Account! One of the main points reasons why people get savings accounts is the interest, and some banks even offer a promotional interest rate during the first few months of account opening.
There is an disadvantage of Savings Account, such as there is a limit of how accessible it is. For example, with savings accounts you can’t write an check, make online purchases or set up recurring bill payments, which means you can’t make purchases with your savings account.
However, you can get checks written out to yourself but that is basically a withdrawal. If you’re interested a savings account, check out some of the features below. To learn more about how Savings Accounts, check out our information below! Check out our Bank Bonuses, Saving Rates and Credit Card Bonuses!
What Is A Savings Account
Savings Accounts are accounts provided by the bank to keep your cash safe. There are many types of savings accounts but the main point of an savings account is that it allows you to grow your money, which can help you grow toward a short term goal.
Basically, you’ll deposit a sum into an account and during that time the bank will pay you interest for keeping cash in the bank. Most reputable banks are even FDIC Insured on up to a $250,000 deposit. One of the cons of having a savings account is the accessibility, if you’re interested in an account that is accessible and earns interested, check out our Money Market Accounts!
Types of Savings Accounts
| Basic Savings Accounts | There’s usually a small minimum to opening the account, usually $200 to $500. During your account opening you’ll earn a APY rate, some banks offer high introductory APY rates during the first few months. |
| Certificate of Deposit (CD) | With an CD, you lock in an APY by depositing a large amount of money for a fixed period, usually three to five years. Withdrawing your money early would result in a penalty, but an CD will earn you a high APY rate. |
| Money Market (MM) | With an MM, you deposit a large amount of money to earn a higher APY and must maintain a minimum balance to avoid fees. |
Closest Option
If you want an account that pays interest plus the ability to spend that money, you have a few options from:
- Interest Checking Accounts: Checking accounts, without the monthly transaction limit, that pay interest on your cash. Interest rates are often lower than what you can get in a savings account, but online interest checking accounts pay competitive rates. You can check out Rewards Checking accounts, plus if you’re interested you can also checkout the Discover Checking Cashback Debit account!
- Money Market Accounts: They pay more than regular savings accounts and you are allowed to write checks from a money market account, plus you might also get a debit card for spending. Just like a savings account, you have a six-per-month limit, so these accounts might not be available for everyday use. If you need to write checks on your savings occasionally, they might need your needs.
What You Can Do
Even with the six-per-month rule, it doesn’t mean you have to make a trip to the bank to use money in your savings accounts. You get six chances to move out what you need for the month.
Here are some ways to keep your cash accessible:
- Transfer to Checking: You’ll need to transfer to your checking account and spend from that account. These types of transfers are limited to six-per-month unless you do them in person or at an ATM, so you should be able to get enough out each month when planned correctly. However, if you don’t have a checking account, open one! But if you’re unable to open a checking account at a bank or credit union, try a prepaid account.
- Get Cash: There are no federal limits on how often you withdraw cash from a savings account using an ATM or teller.
- Get a Check: You can have the bank print a check from your savings accounts. If the check is payable to you as the account owner, this transaction won’t count against your monthly limit. You can also request a check payable to somebody else, but check with your bank first. So if it’s allowed, you’ll need to sign forms and it will count against your six transactions.
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Bottom Line
To help save toward a short term goal, Savings Accounts are the way to go as they accumulate interest! In terms of accessibility, they may not be the route you may want to go as it’s not possible to make purchases from a savings account.
If you’re looking to earn a higher interest rate, make sure to check out the different types of savings accounts! Check out our Bank Bonuses, Saving Rates and Credit Card Bonuses!
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