Savings Accounts and Other Options
By Brad McDonnell on Thursday, October 25th, 2007 :: 11:00 amCategory: Watching Out 4 You
Saving money is crucial to maintaining a strong financial outlook. When you save money, it’s important to generate earnings from the amount and not let your money depreciate under your mattress or in your closet. Investing your money in a risk-free savings option is an excellent way to earn interest. Here are three common savings options offered by most banks:
Savings Account
Traditional savings accounts, offered by your local bank or credit union, are very liquid, allowing you to get your money as soon as you need it. You benefit from a savings account by earning interest. Most savings accounts, however, pay some of the lowest interest rates among all savings options, usually less than half a percent. The ease of opening a savings account attracts the average consumer looking to invest money and avoid risk, while still having the option to withdrawal money without penalties.
Money Market Account
If you’re looking for a savings option with a bit more return, then a money market account is your next step up from the traditional savings account. Money market accounts (MMAs) pay higher yields than savings accounts. You earn a higher rate of interest but face withdrawal limitations and minimum balance restrictions.
Certificate of Deposit
A certificate of deposit (CD) is a useful option to save and earn a higher interest rate than on most liquid savings and money market accounts. You earn the high interest by agreeing to let the bank, or holding institution, hold your funds for a specified term period. CDs are not liquid, and if you need to cash out before your term ends, you lose a portion or all your interest earnings. Banks offer CDs for a fixed amount of money and predefined term period. You may purchase a CD for a little as $500 or $1,000, and the term length ranges from a month to five years.
Author Bio: Settle your debts today! Read about debt relief from financial writer Brad McDonnell, who is an expert on personal finance topics involving debt consolidation.
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