Types of Savings Tools Checking Account Savings Account Money Market Deposit Account Certificate of Deposit Savings Bonds
Checking Account A checking account is an account you obtain from a bank; they hold your money and allow you to take some out, buy items with your money, and pay your bills. The banks will also give you: checks, a debit card, and/or an ATM card. There are four types of a checking account: Basic-may be free or require a minimum deposit or minimum balance Joint- an account you share with another person Interest-bearing- gives you an interest, requires a higher deposit than basic NOW account- not technically checking accounts, gives you interest and to write checks against the money in the account
Checking Account Cont. Your funds can be accessed through a check, an ATM, a debit card, the telephone, or the internet. Research your options for checking accounts and learn more about each type of checking account before jumping to conclusions
Savings Account account is an account to hold your money and not spent on a daily basis. Savings Accounts are interest earning, but they have lower interest rates compared to other saving tools. Requirements of savings account depends on where you get it. If your withdrawal limit is overreached, you will be charged; however, the amount of the fee is based on your bank or depository institution. Savings accounts can be accessible through your depository institution, ATMs, telephone, and/or internet. A savings
Savings Account Cont. In deciding which savings account is right for you, consider the following: How much money do you have to start the savings account? Certain accounts require a minimum deposit. Will there be limits on the number of withdrawals? How easily can you access the money if you need it? What kind of interest can you earn in the savings account? Although a savings account with a bank is not where you are going to earn lots of interest, you do want to earn as much as possible. Find a savings account that offers a good rate. Courtesy of: http://www.lendingtree.com/smartbor rower/saving-money/checking- savings-accounts/choosing-a-savings- account/
Money Market Deposit Account A money market deposit account is a government insured account offered at most depository institutions. Money market deposit account have tiered interest rates. Tired interest rates mean the amount of interest earned depends on the account balance. Money market deposit accounts have a minimum balance and a limited number of transactions, so is less accessible than the other savings tools. If the monthly minimum balance falls below, the account will earn a lower interest rate.
Monkey Market Deposit Account Cont. Money Market is just a generic name used to describe the market in which banks and other financial institutions to lend, borrow and trade money, bonds and other financial instruments. Since the account is not considered a transaction account is subject to the regulations on savings accounts: only six withdrawal transactions to third parties are permitted per month. ATM transactions may or may not be counted.
Certificate of Deposit (CD) A certificate of deposit is an insured interest earning savings tool that allows restricted access to the funds for a certain amount for time (which varies). The interest rate of a CD varies, in which depends on the duration and the amount of the deposit. No money can be taken out of CDs or else you will be the owner will be assessed with large penalty fees.
Certificate of Deposit Cont. CDs are offered by depository institutions. The funds are held for a specific amount of time, which is various. Tips for picking a CD: Think about your financial goal Find out when the CD matures Investigate any call features (Your ability to lock in a good interest rate for a long time is restricted with a callable CD) A callable CD give the issuing bank the right to terminate the CD after a certain amount of time Confirm the interest rate you’ll receive and how’ll you’ll be paid. Ask whether the interest rates ever change. Research penalties for early withdrawal.
Savings Bond A savings bond is a discount bond (a bond is similar to a loan but is given to a company or the government; there are many types of bonds available, but only one is considered a savings tool) purchased at 50% of the face value from the government. Savings bonds are the least accessible of all the savings tools because the accessibility is restricted. They can be redeemed once they double in value. Although the amount of time it takes depends on the interest rate.
Savings Bonds Cont. Savings bonds are affordable and safe because they are backed by the government. The purchase of paper bonds were discontinued as of January 1, 2012 at financial institutions; however you can go online to purchase two types of savings bonds: Series EE U.S. Savings Bonds: a bond in which is purchased at full value and redeemed at full value. An appreciation type of savings security. Series I U.S. Savings Bonds: Inflation- indexed. Sold at face value, up to $5,000, in any calendar year. Offer fixed rate of interest, and adjusted for inflation. If you redeem these bonds within the first five years, you will have to forfeit the three most recent months interest; although after five years, you will not be penalized.