Certificate of Deposit (CD): Certificates of deposit or CD, allow you to save your money at a set interest rate for a pre-set period of time - which can range from a few months to several years.Understanding the account’s terms and benefits will allow for a more informed decision on the account best suited for your needs. Savings accounts vary by monthly service fees, interest rates, and account features. Interest rates can be compounded on a daily, weekly, monthly, or annual basis. Savings account: A savings account allows you to accumulate interest on funds you've saved for future needs.To determine the most economical choice, compare the benefits of different checking accounts with the services you actually need. Accounts may have different options to help avoid the monthly service fee. Customers can typically use a debit card or checks to make purchases or pay bills. Checking account: A checking account offers easy access to your money for your daily transactional needs and helps keep your cash secure.Here are some definitions to help you navigate your banking needs: To make these decisions, it’s helpful to first understand the differences between the most common bank account types. Should you choose the basic checking option or an account that earns interest? Do you want the convenience of a bundled checking and savings account or the higher returns of a money market account? Also keep in mind that some banks don't issue debit cards for money market accounts, so having accounts with one bank that you can easily move money between may be helpful.When you go to a bank to open a new account, you will have a variety of account types and features to choose from. With savings, checking and credit accounts under one roof, it's easier to transfer funds (free of fees) between accounts. There could be an advantage, however, to having a savings account at a bank where you already have a checking account and lines of credit. For example, having multiple savings accounts could be a useful way to divide up your accounts based on your financial goals - you can open one account to save up for college and another one for a home. While savings accounts are more widely available than money market accounts, choosing between them does not need to be an either-or situation. If you're looking for higher rates, you might be better off opening an account with an FDIC-insured online-only bank. And national banks such as Wells Fargo, Chase and Bank of America aren't offering good interest rates on either their savings accounts or their money market accounts. That noted, several online-only banks, including Bask and SoFi, are offering savings account APYs that are higher than money market accounts on this list (2.20% and 2.00%, respectively). (An APY - which is the rate of return earned on an investment, including compound interest - is effectively your interest rate for the year.) For either account, anything beyond 1.00% is considered a robust interest rate. Savings accounts and money market accounts are currently offering around the same APYs. Should I open a savings account or a money market account? Here are the best money market accounts available today - but first, some important notes about insurance and withdrawal limits for money market accounts. They're also particularly attractive now that annual percentage yields, or APYs, are starting to rise as a result of the Federal Reserve's recent interest rate hikes.Īs a general rule of thumb, anything over a 1% APY for a money market account is considered a good rate. If neither of these requirements are an issue, a money market account can offer a safe way to grow your savings, while still offering access to your cash. You can typically earn more interest with a money market account than with a traditional savings account, but money market accounts often require higher initial deposits or minimum balances. Because money market accounts offer competitive interest rates, they can be a good way to save up, especially if you think you might need to pull from the account on occasion.
But unlike a traditional savings account, money market accounts typically offer checking account features, including access to your cash through debit card withdrawals and physical checks.
A money market account is a type of savings account that earns you interest.