Different Types of Savings Accounts
Savings accounts have many types, from basic personal savings accounts to intermediate savings accounts that substitute as financial tools. With the growing money market industry, consumers and households are learning that there are more ways to optimize their savings and investments. By understanding each of these advanced savings accounts, you are better prepared to invest your money in the right accounts.
One of the more profitable types of savings account is the money market account. A money market account works like a checking account, wherein the opening deposit is higher than personal savings accounts; usually in the range of $500 to $2,500. The interest rates are also higher or similar to a special savings account. In a money market account, the bank gives you a small quantity of checks, so you can facilitate withdrawal of funds from your account. Ideally, these checks should be used only for emergency purposes, so you can better save your money. However, there is a monthly limit on the number of money market checks that you can issue each month.
Another kind of savings account is certificate of deposit accounts. Certificate of deposit accounts work like a savings account, but they impose heavy restrictions or penalties for withdrawals made before the account matures. This savings account is generally called a time deposit in other countries. Banks that administer certificates of deposit will ask you to freeze your money for a specified period of time that could range from three months to five years or more. The security of this account allows account holders to save money on competitive rates while ensuring that the principal is not exposed to unexpected expenses.
The intermediate savings accounts are recommended only if you have a basic personal savings account. It is also wise that you have a considerable sum of money to put into these accounts to take advantage of the higher interest rates.
CD (Certificate of Deposit) Rates :: Jun.21.2008 :: CD Rates :: 3 Comments »
Most people that are interested in investing in Certificates of Deposit (CD) will find that using a
Laddering CDs is a good method of avoiding investing all of your money into Certificates of Deposits at a single low rate of return. Another advantage you get is that you will not have to wait more than a year to get back your money if you use a laddering CD portfolio. It works by buying different duration CDs and each year counts as a step up the investment ladder and when your one-year investment matures you can reinvest the money into a longer duration CD such as a five-year CD. In this way, you get more liquidity as well as a more secure means of making income.
Investors interested in getting the
Some investors are completely familiar with regular certificate of deposit accounts but have never heard of jumbo CD accounts. Jumbo CD accounts are very similar to standard certificate of deposit accounts but the initial deposit to begin a jumbo CD account differs greatly than a regular certificate of deposit startup principal. The term jumbo actually infers that the initial investment in the account is considerably large.
When an investor decides to purchase certificates of deposit, they must find the very high rates. It is imperative that the investor do some research in order to find the best cd rates because the rate of interest on a certificate of deposit remains fixed during the duration of the CD. When the certificate of deposit finally matures, the investor receives the initial amount of money they used to purchase the CD plus interest.