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.