Regardless of where you are in your personal or professional journey, building a nest egg is key for long-term goals, whether that’s buying a home, retiring comfortably, or funding a child's education.
Promotional savings rates can make saving even more rewarding. We have competitive promotional rates which can help you reach your financial milestones faster.
The first step in unlocking these benefits? Choosing the best savings account. Let’s explore the different types of savings accounts, and how each tailor to different financial needs and goals.
How Much Savings Should You Have at Different Stages of Life?
Savings goals vary greatly depending on individual lifestyles, incomes, and ambitions. While personal circumstances will shape specific numbers, different stages of life bring unique financial focuses.
For example:
- In your 20s: Young people who have just entered the workforce may have more outstanding debt, such as student loans. As a result, they tend to focus their budget on paying down their obligations and creating an emergency fund.
- 30s to 40s: This period often involves saving for a home down payment, reducing mortgage balances, and building retirement funds.
- 50s and beyond: As people approach retirement, the focus generally shifts to maximizing retirement savings and securing financial stability.
Regardless of your current life stage, a common guideline is the 50-30-20 rule: save 20% of your annual income, allocate 50% to necessities, and use 30% for discretionary spending.
4 Types of Savings Accounts
What is the best savings account? Unfortunately, there’s no one-size-fits-all answer — the right account depends on your 5, 10, or 20-year plan and the intended purpose for your accumulated funds.
That said, here are four common types of savings accounts, each offering unique features that cater to different saving strategies and life circumstances.
Traditional Savings Accounts
For those beginning their savings journey, a traditional savings account is the best standard option to explore. Some hallmarks of traditional savings accounts include:
- High liquidity: In most situations, there aren’t any withdrawal penalties as long as you maintain the minimum balance.
- Limited risk: Your savings aren’t subject to market fluctuations.
- Stable savings interest rates: While these accounts generally offer less competitive savings interest rates, they are ideal for those building their foundational savings and seeking peace of mind.
Money Market Savings Accounts
Want an alternative to traditional savings accounts? Consider opening a money market savings account. Unlike high-yield savings accounts, which are typically geared towards maximizing interest earnings with limited access, money market savings accounts combine competitive interest rates with enhanced flexibility, making them ideal for those seeking both growth and accessibility in their savings.
Though they may require a larger minimum deposit than a traditional savings account, you enjoy:
- Greater flexibility: With no penalties or restrictions on withdrawals, our Money Market savings account serves as a perfect base for your emergency fund, ensuring quick access to your savings when urgent needs arise.
- Higher savings interest rates: Earn more on your deposits compared to traditional savings accounts.
- Potential check-writing privileges: This adds a layer of convenience to high-yield saving.
Certificate of Deposit Accounts
Have excess funds that you don’t need to access in the near future? Consider a Certificate of Deposit (CD) account — these lock your savings away for a fixed period in exchange for higher interest rates and financial predictability.
Here’s how they work:
- Choose your term: Select a fixed period during which your funds will be locked away. Terms can vary, allowing you to plan according to your financial schedule.
- Deposit your funds: Invest your excess cash into the CD account.
- Earn interest: CD accounts offer higher savings interest rates compared to regular savings accounts. Depending on the terms, the interest may be fixed or tied to market fluctuations.
- Access your money at maturity: Once the CD reaches its maturity date, you can withdraw your initial investment plus the accumulated interest in one lump sum.
This process not only secures your funds but also enhances your returns over the maturity period, making CDs an excellent option for long-term savings goals.
Specialty Savings Accounts
For goals that are unique and specific, like saving for healthcare expenses or planning for higher education, consider specialty savings accounts, such as:
- Health Savings Accounts (HSAs): Ideal for individuals with high-deductible health plans, these accounts allow for tax-free contributions that can be used for qualifying medical expenses.
- Individual Retirement Accounts (IRAs): Whether you choose a traditional IRA, which provides tax-deferred growth, or a Roth IRA, with tax-free growth, these accounts help secure your financial future after retirement.
- College funds (e.g., 529 plans): These plans offer tax benefits and, in many cases, state incentives, making them an attractive choice for parents and grandparents who want to contribute to a child's education expenses.
Given that these accounts are designed for specific purposes, they often come with unique terms and potential penalties for early withdrawal. They can also be opened for specific individuals like kids or students, providing a tailored savings vehicle that aligns with individual financial goals and life situations.
Open the Right Savings Account Today
Starting to save is your first step towards a secure financial future. That said, not all savings accounts are created equal — it's important to explore and compare all your options to find one that best fits your financial goals.
Don’t miss the opportunity to grow your savings smarter and faster. Open a new Money Market savings account today and take the first step towards improving your financial wellness.
Explore Offers and Connect With A Banker