How to Choose a Savings Account
Saving money can be difficult in and of itself, but finding the right savings account to fit your needs can sometimes present just as much of a challenge. Should you keep your money in a savings account or open a Certificate of Deposit? And what’s the difference? Let’s take a look at the benefits of each type of account.
Basic savings accounts
Savings accounts range in type from the most basic to premium accounts that offer a higher interest rate. There are even specialized accounts, such as Holiday Club, that allow you to save all year long and have your funds automatically disbursed to you in time for seasonal shopping. Or, you can designate a regular savings account to use for whatever purpose you like, such as saving for a vacation. Regardless of account type, savings accounts allow you to earn a return while still keeping your money in an accessible account. And, while savings accounts aren’t tied directly to your debit card, you still have the option to set up overdraft protection to your checking account for peace of mind. These accounts allow you easy access to your money, while keeping enough separation for you to save as it fits your budget.
Certificates of Deposit
A Certificate of Deposit (CD) is better for long-term savings plans. The minimum balance to open a certificate is $1,000 and you can select terms as low as three months and up to five years. Once you open a certificate and deposit the funds, you are locked into a rate—and your funds are also locked up, in a sense. You can still make a withdrawal from your certificate should you need to access your funds; however, doing so will incur an early withdrawal fee.
It’s all about your style
What it all comes down to is flexibility and personal preferences. Savings accounts allow you to start with little and put aside as much as you like, or are able to, over time. You can even set up an allocation from your direct deposit to go directly to your savings account, making saving as easy as “out of sight, out of mind.” However, if you’re able to start with a larger amount of money, opening a certificate will earn you a higher interest rate for essentially locking up your funds without touching them. But whatever you’re comfortable with—whether you’re a casual saver or more conservative—there’s bound to be a product or method that fits your style. For help choosing the best savings option for you, visit one of MIDLORIDA’s branches to speak with one of our friendly experts.