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There are several types of savings accounts, including traditional savings accounts and high-yield savings accounts.
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Savings accounts are great tools for working toward various goals, and there are many types.
You may prefer a traditional savings account if you want to bank in person.
For better interest rates and lower fees, you might like an online high-yield savings account.
A checking account is a good place to store money you need for rent, daily necessities, or a night out with friends. But it isn’t ideal for saving for the future. To remove the temptation and watch your money grow, you’ll want to open a savings account.
There are several types of accounts to choose from, and your best fit will depend on your banking preferences, goals, and how soon you’ll need to access your money.
Compare savings accounts
Here are the six types of savings accounts:
1. Traditional savings accounts
Examples: Wells Fargo Way2Save® Savings Account, TD Beyond Savings Account, Citi® Savings Account, Regions LifeGreen® Savings Account
You can open a regular savings account with a brick-and-mortar bank or credit union.
Best for …People who like banking in personInterest ratesLowProsAccess to a physical branchConsLow interest rates, high monthly fees
These accounts pay low interest rates, sometimes as little as 0.01% APY. Most charge monthly service fees, but you may qualify to have them waived. You have the benefit of being able to speak to a banker face-to-face when you have a question.
2. High-yield savings accounts
Examples: Capital One 360 Performance Savings™, Discover Online Savings Account, Chime Savings Account, Bask Bank Interest Savings Account
Most high-yield savings accounts are available at online banks. These banks are just as safe as brick-and-mortar banks, as long as they have FDIC insurance to protect your money should something go wrong and the bank shuts down. With the exception of a few companies, such as Capital One, online banks don’t have physical branches.
Best for …People who are comfortable banking digitallyInterest ratesHighProsHigh interest rates, low fees, low opening depositsConsNo physical branches
Because online banks don’t have to pay for the expenses that come with a physical building, they can afford to pay you higher rates and charge lower fees. Most don’t charge monthly service fees at all.
You also don’t need much money to get started. A few high-yield savings accounts require $100 or more as an opening deposit, but many don’t ask for anything to open an account.
3. Money market accounts
Examples: Axos High Yield Money Market Account, CIT Bank Money Market Account, Sallie Mae Money Market Account, CFG Bank High Yield Money Market Account
Money market accounts are similar to savings accounts. You can find them at either brick-and-mortar banks or online institutions. The best ones are usually online, though, because they tend to pay higher rates and charge lower fees.
Best for …People who want easy access to their savingsInterest ratesUsually highProsHigh interest rates, debit cards or paper checksConsHigher opening deposits
The main difference between a money market account and savings account is that the former usually comes with a debit card or paper checks. This makes it easier to access your savings in a pinch, making money market accounts worthwhile options for storing your emergency fund.
Money market accounts typically have higher minimum deposits than savings accounts, maybe a few hundred or a few thousand dollars. You can find some banks that don’t require any opening deposit, though.
4. Certificates of deposits
Examples: Marcus by Goldman Sachs High-Yield CD, Synchrony CD, Discover CD, Crescent Bank CD
A certificate of deposit, or CD, can be a good savings tool if you don’t need quick access to your money. Choose a CD term — probably between three months and five years — and keep your money in the account until the term ends.
Best for …People who can tuck away money for a long timeInterest ratesUsually highProsHigher rates with longer terms, fixed rates, no monthly feesConsLower rates with shorter terms, higher opening deposits, penalties for withdrawing money early
Savings and money market accounts pay variable interest rates, meaning your rate can change after you’ve opened the account. But CDs pay fixed rates, so your rate is locked in once you’ve deposited the cash.
You can open CDs at both brick-and-mortar and online institutions, but online banks pay better rates. Regardless of which type of bank you choose, you shouldn’t have to pay monthly service fees.
5. Cash management accounts
Examples: Wealthfront Cash Account, Robinhood Cash Management Account, Aspiration Account, Betterment Cash Reserve Account
A cash management account is a hybrid checking/savings account that is generally offered by an online banking platform. Some cash management accounts pay high interest rates that are competitive with the rates offered by online banks.
Best for …People who want to bank and invest with the same companyInterest ratesModerateProsAbove-average rates, low fees, no withdrawal limitsConsLower rates than HYS accounts, no physical branches
Some cash management accounts pay the same rate on your entire balance, while others let you set up separate savings goals and pay interest just on your savings balances.
Online banking platforms such as Wealthfront, SoFi, and Robinhood aren’t technically banks. Most of them actually specialize in investing, but they provide cash management accounts so you can keep your spending, saving, and investing money all in the same place. These platforms are partnered with real banks, so your money is still safe through FDIC insurance.
6. Specialty savings accounts
Examples: Health savings accounts, custodial accounts, IRAs
The types of savings accounts we’ve already mentioned can be great places to store emergency funds or save for goals like a down payment on a house. But if you want to save for retirement, your health, or your child’s future, you may want a specialty savings account.
Best for …People with specific or unique savings goalsInterest ratesVaries by account typeProsSave for a specific goal, may receive tax benefitsConsOnly for certain types of people, some restrictions on withdrawals
For example, a health savings account is an account specifically for health-related costs, and you can invest funds to earn even more money to pay for medical expenses in retirement. Or you could open a custodial account for a child so they can have money for education, a car, or rent when they turn 18.
Before opening a specialty savings account, research whether you’re eligible and if there are any restrictions regarding when you can withdraw money.
Frequently asked questions about savings accounts
What is a savings account best for?
A savings account is a better tool than a checking account for stowing away your money so you won’t touch it.
Savings account also allow you to earn interest on your money. If you put that money in a high-yield saving account that pays an average of 2.50% APY (it may decrease or increase over the years) and compounds interest daily, that $10,000 turns into about $11,331 over five years. And that’s assuming you don’t contribute any more money to your savings.
Should you put money into a savings account or invest?
If you don’t have at least three to six months’ expenses saved for an emergency, you should focus on saving before diving too deep into investing. (There are some exceptions to this. For example, if your employer offers a 401(k) match, you may want to take advantage of it.)
Otherwise, there’s a general rule of thumb when deciding whether to invest or save:
Will you need the money in five years or less? You probably want to keep it into a savings account. The market fluctuates, so investing money you’ll need in just a couple of years is a risky move.Will you need the money five years or more down the road? Investing could be a good way to earn more money over time.
What type of savings account earns the most money?
A CD with a longer term — probably five years or longer — will probably earn you the highest interest rate.
But if you can’t part with your money for five years, a CD with a shorter term is a good option. Otherwise, a high-yield savings account or money market account could be a good alternative if you want quicker access to your savings.
Some specialty accounts, such as Roth IRAs or health savings accounts, will earn you the most money in the long term, which is why they’re good accounts for saving for retirement.
Which type of savings account earns the least money?
Traditional savings accounts will probably earn you the least money. Or a money market account or CD you open at a brick-and-mortar bank.
Brick-and-mortar institutions have to cover the costs that come with running multiple physical branches, so they typically pay lower interest rates and charge higher fees than online banks.
What type of savings account is best?
There’s no clear “best” type of savings account. It depends on what you want to get out of the account. Here are your options:
Traditional savings account: Best if you want to bank in personHigh-yield savings account: Best if you want to bank digitallyMoney market account: Best if you want a debit card or paper checks tied to your savingsCD: Best if you’re comfortable not touching your money for a long timeCash management account: Best if you want to keep your checking and savings in one account, and/or bank with the same company you use for investingSpecialty savings account: Best if you have a specific savings goal, including preparing for retirement, covering health expenses, or saving for your child’s education
Where can I find information about the best savings accounts?
Maybe you already know which type of savings account you want, but you don’t know which institutions have the best accounts. Insider has guides for our top picks for multiple types of accounts. Check them out here:
Best savings accountsBest high-yield savings accountsBest money market accountsBest certificates of depositBest checking accounts (this includes some money management accounts since they’re hybrid checking/savings accounts)Best Roth IRAsBest Traditional IRAs
Keep in mind, you don’t have to choose just one type of savings account. For example, you could open a high-yield savings account, CD, and Roth IRA. Think about your savings goals, then open the account(s) that will help you attain them.