4 Different Kinds of Savings Accounts

credit: danesparza

So, you’ve worked hard, budgeted carefully and managed to get yourself out of debt – or at least out of credit card and personal loan debt. The next step is to make sure you have a good savings account, both for money to use in the future, and in case of emergencies. That way you won’t get into the debt trap again. There are a number of different kinds of savings accounts you’ll need to consider, each with their own pros and cons:

• Basic Bank Savings Account: This is your stock standard bank account with a very low interest rate. The only reason you might need an account like this is if you need to access your money regularly, as they usually have fewer restrictions on the number of withdrawals per month.
• High Yield Savings Account: Also similar to a standard bank account, the difference here is the interest rate (usually about 2% more than a basic account). There are also usually more restrictions on how many transactions you can make per month and what the minimum balance must be. These are good if you’re saving money that you won’t need to access in the short term.
• Money Market Account: Similar to a high yield account, there are usually a lot of restrictions on transactions, but the interest rate is higher, and might get even increase with a larger balance.
• Online Savings Account: These are a relatively new kind of account, being offered by companies like ING and HSBC. They will usually also have some restrictions on transactions, but tend to have higher interest rates because the companies operate purely online, and don’t have the overhead of a regular bank.

Tags: Banks and Banking | Money Market | savings