Top Savings Opportunities Found at Today\'s Bank

Author: BankFeeInsider.com     Sunday, September 07, 2014 12:00 AM

The banks of today offer a variety of opportunities for its members to save money. This is great news because financial experts strongly suggest saving a portion of any wages coming in so that an emergency fund can be maintained. Many financial experts also recommend saving up for a large purchase instead of using a credit card.

Savings Accounts

Savings accounts are the typical method of savings that comes to mind when a person thinks about what a bank has to offer. Typically, there are two types of savings accounts: passbooks and statement. The only difference between the two is that a passbook savings account issue a small book to the customer so that deposits and withdrawals can be recorded. The statement account holder is simply issued a monthly statement that details the transactions that occurred to the account during the previous month. Though they pay a very low rate of interest, savings accounts are insured by the bank.

Money Market Accounts (MMA)

Money market accounts are backed by the bank up to a certain amount. It is important to check that amount before keeping large amounts of money. MMAs often require a higher initial deposit, but they also pay out a higher interest rate. This can be as high as twice what a savings account pays out at the same bank. The rules of MMAs enable the owner to write three checks per month and to make unlimited free deposits.

Certificates of Deposit (CD)

A certificate of deposit (CD) allows its holder to invest their money for a period of time that varies from three months up to six years. The rates of interest increases as the term length for the CD increases. It is important to ensure that the money invested in the CD is not going to be needed during the term length as there are penalties for making early withdrawals. Some banks offer incentives to roll CDs over to a new term at the end of the previous term.

Money Market Funds (MMF)

A type of mutual fund, money market funds are not insured by the government. However, because of the way they are regulated, MMFs offer a very secure way to save money and get a higher interest rate at the same time. The regulations dictate that the monies from MMFs must only be invested in high quality investments that are short term in length. A good example of this type of investment is a short term loan that are issued to county governments. Shop around for the best interest rates being paid by MMFs.

The above vehicles for savings are just a sample of what the bank can offer. They also offer other methods of saving, such as savings bonds and Individual Retirement Account (IRA)

 

Source: BFI