Types Of Savings Accounts

Basics

Congratulations, you have earned, received, found or won MONEY…now what?  One of the best ways to save money “safely” versus making or losing money is to put it into a savings account.  Save for what or for how long… that is up to you.  Start dreaming!

It is always important to put some of your money in a safe place, knowing that it will be there pretty much immediately when you need it.  It probably will only make a "LITTLE" money so make sure you understand little, like in very little, but it WILL be there.  There are different kinds of savings account.  Some will provide you with a way to save more money (higher interest rate), but generally there is a catch.  It can either be the amount of money, the amount of time, or both, in order to qualify for a higher rate.

Saving At Home

You could just leave your money in your room if you are like me, the one with the books, papers and clothes over the floor) wallet, or locker.  However, having it accessible (if you can find it), might not be such a good idea, since you might be tempted to spend it.  Also it won't be a safe as it would be in a bank.

Also, what you put in will be the same as what you get out…nothing extra.  That $50 you earned will be the same today, one year from now, as it will be 10 years from now.  But I can guarantee that $50 will not buy you the same in 10 years!  That is not to say don’t keep a few bucks around for "immediate spending", but do something else with the rest.  You might check out a Savings Account.

 

Savings Account

Savings accounts are the simplest way to save money.  This is a safe place to put your money if you don’t need it in the short term.  The bank is so appreciative of you letting them hold your money they will pay you for the privilege…which is called interest see Simple & Compound Interest & The Rule Of 72 Section.

How much interest?  That depends on the bank you choose, how much you have in the bank, and how long you are willing to keep it there.  (Beware! Interest rates can and do change).  Shop around.  Look at all the banks in your local area see Selecting A Bank .  Research and compare the various accounts/programs and interest rates and then open your account.

There are different Types Of Savings Accounts.  Consider how often you plan to deposit money and how frequently you plan to withdraw it.  Then shop around to find the best type of account for you with the highest interest.  However, be realistic because banks will penalize you if you take money out before it is due if you choose certain types of savings accounts. Rule of Thumb:  The more you put in, and the longer the bank gets to hold your money, the more interest you will receive.  The easier it is for you to withdraw your money, the less interest you will earn.

 

Deposit Options

Most people have a deposit account.

  • Deposit Account:  With this type of account there are no restrictions on how much, or how often you make a deposit.
  • Regular Saver:  This is where you make a specific deposit every single month.  The best example of this is for the bank’s youngest customers, e.g. kids who have a "Christmas Club" or "Holiday Club" savings account.  Here you put in a set amount every month (say $10) and then are able to withdraw the money, plus interest, for the holidays.  A bank issues a passbook to record your deposit and shows you the interest amount you have accumulated each time you make a deposit.  This is a great way to start to learn about savings and interest.  Nowadays instead of just one fixed amount, most banks allow you to make a deposit within a specified range.  And this might be good for people who have a job and want part of their pay check to automatically be put into a savings account.  It also usually pays a good interest rate. 

 

Withdrawal Options

Remember think carefully about the kind of "saver" you are before you sign up so you will not be penalized by fees or loss of interest (in this case it is good to repeat myself).
  • Instant Access:  This places no restrictions on how much or when you can withdraw your funds.
  • Interest Penalty Type Account:  Here you can withdraw as much as you want whenever you want HOWEVER, the bank will not pay you any interest for the month in which the withdrawal is made.
  • Notice Accounts: This type of account requires you to give thirty, sixty or even ninety days’ notice before you make a withdrawal, or you will be hit with substantial interest penalties.