What Type Of Saving Accounts Will Suit Your Needs?

Financial freedom has been the buzzword for many generations globally. Saving money is the first step towards gaining that freedom. Some options like 401k accounts, IRA accounts, real estate or US savings bonds work out very well if they are planned in advance and even while one is working. However, you must thoroughly check the saving options available to you and decide upon the one that will suit your needs the best. Here are some choices given about the type of saving accounts you can go for, with pros and cons discussed.

It is liquid cash that is kept aside as savings apart from jewelry, property, etc for those tough times. The security of your future depends completely on how you foresee it and your wants and needs in future. You must decide for how much you need to save based on your calculations. Plan your savings for a year to begin with and then review your savings plan at the end of the year.

Based on your personal circumstances, you can save your money in the savings accounts or passbook accounts normally available with the bank. It offers you the lowest interest rate on your options but doesn't require you to keep a minimum balance. It has a flexible withdrawal system and is FDIC insured.

Then there are the saving certificates. Such accounts need a holding period of a minimum of six months and provide guaranteed interest rates slightly higher than normal saving accounts. The capital amount of saving is FDIC insured but has penalty clause if you withdraw early, before the minimum holding period.

Another option to choose from is the checking account that earns interest, especially beneficial for those who have a habit of writing checks for all transactions. Such accounts offer guaranteed interest rates higher than normal savings account and are FDIC insured. However, it does require a minimum balance and if you're not able to hold up to it, you may have to pay a service charge.

There are also those accounts where banks or credit unions offer you a higher rate of interest. They are called money market accounts where your capital savings is FDIC insured. It provides you a higher interest than fixed deposits and also lets you write three checks per month. Problem with such accounts is that one needs to keep a minimum balance in the bank of at least $1000 to $2,500 depending upon the bank.

This is higher than normal saving account and there is no interest rate paid to you if your account dips lower than the minimum balance. Another limit that it sets is that one can only withdraw a maximum of six times.

If none of the above interests you, there are money market funds you can opt for. Very similar in interest rates, minimum balance, penalties and withdrawal limits as money market accounts, they offer you a check limit of three in a month. The recent change is that now these types of saving accounts are FDIC insured.


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