You’ve got a savings account, so you probably think you’re covered, right? While that could be true, you could potentially get a lot more from your money just by putting it in the right kind of savings account.
So what are the benefits of different types of savings accounts? And how do you choose which one is best for you? Read on, savvy saver!
1. Traditional Savings Account: Lower Return + High Access
We all know what a basic savings account is, but besides being a safe place to store your cash, it can also have a lot of benefits. Here are a few simple saving hacks to help you win the savings game:
- Shop for a competitive savings account. Look at the interest rate, minimum balance requirements, fees and account features to weigh your options. Because credit unions are member-owned, they can often give their members better rates than the big banks can.
- Use automatic savings deposits to trick yourself into saving money every month. Once you set it up, you probably won’t even miss that money and you’ll be getting closer to your financial goals without even lifting a finger – seriously!
- Set up multiple savings accounts to put money toward different priorities, like saving for a big trip or finally starting one of those emergency funds that you keep hearing so much about.
With Summit, you can open a primary or secondary savings account with as little as a $5 deposit, and you’ll earn dividends on balances of $25 or more. Plus, you can track your progress toward financial goals using our free Summit Money Minder app. Now that’s what we call smart saving.
2. Money Market Account: High Return + High Access
A money market account is a nice middle-of-the-road savings account. You get the benefit of a higher savings rate, but you can still access your money in a pinch if you need to. One thing to keep in mind is that they require a minimum deposit to open ($2,500 if you’re banking with Summit), so they’re ideal for when you’ve already built a nice cushion of savings (like that emergency fund you’ve been working on!). And when you open a money market account with Summit, there are no minimum balance requirements or withdrawal fees. You can even write a limited number of checks each month. It’s the best of both worlds!
3. Certificates: High Return + Low Access
If you’re trying to build your savings but facing regular setbacks (too much online shopping, anyone?), a certificate could be the way to go. You might also hear this referred to as a “certificate of deposit” (aka CD) at a traditional bank, but the two are effectively the same. With a Summit Certificate, you can set money aside for those big, life-changing purchases without being tempted to drain your account for other things. It’s also a good option if you aren’t quite comfortable investing in the stock market because it’s totally safe (a.k.a., you won’t lose any of your initial investment) but you still get a higher savings rate than a traditional account. Can you say win, win?
Bonus: With a Summit Certificate, we’ll waive early withdrawal penalties when you get a Summit home loan, and you can always convert your certificate to a retirement fund if plans change (and to be honest, they often do).
Saving is essential. But knowing how and why to use different types of savings accounts can help you take control of your money and start working toward the life you really want. As always, we’re here to help! Schedule an appointment with a Summit financial coach to talk savings. Save on!