There are several types of savings accounts that anyone can open at their local bank. Let’s take a look at four of them.
1. The first is a regular passbook savings account. The bank may require an initial deposit in order to open the account. However, you can deposit and withdraw money at any time, as long as you keep the initial balance in the account. You can check the interest received on passbook savings by comparing banks either online or by visiting their location.
2. A money market account offers a higher rate of interest than the regular savings account.
3. A Certificate of Deposit or CD yields a high rate of interest. The difference between this and a savings account is that the money is held for a specific period of time, depending upon the type of interest rate. Moreover, unlike the savings account, you cannot withdraw funds at any time.
4. A holiday club is another form of savings. Although it does not offer a high rate of interest, it is nonetheless a good way to save money for the holidays. You can open a holiday club book for five, ten, or twenty dollars. A calendar accompanies the passbook delineating when the payments are due. If you do not reach the goal, that is, complete the required number of payments, you will still receive a check a few weeks after the last date of payment as noted on the passbook.
If you are interested in opening any one of these savings account, it is a good idea to talk with the bank personnel to determine the appropriate account for you.
For example, if you have a large sum of money you can open a CD account and a regular savings and checking account. In this way you can utilize both the savings and checking accounts to cover whatever expenses you have on a monthly basis, while at the same time keep the bulk of the money in a CD account to obtain higher interest.
When the CD account reaches the expiration date, you can take all the money earned in this account and renew it. You can also take the interest earned and add it to your checking and savings accounts.
Keep in mind that all savings accounts are insured by the FDIC for $250,000. Check with your bank and ask about their FDIC coverage.