What are the main savings accounts that banks offer?
1. Basic Savings Accounts (every bank has these)
The good:
Easier access than other types of savings accounts (not as many limits on how frequently you can withdraw your money)
Usually won’t require minimum balances (like keeping $500 in the account)
The less-good:
Gives you super low interest rates (usually 0.1%; meaning $1000 in savings gets you $1 in interest each month). You do not want ALL your money in an account like this because it’s not “working for you.”
2. Money Market (or, “High Yield Savings”) Accounts
The good:
Offers higher interest rates (can be around 2%, so scoring you $20 for your $1000 savings)... although rates do go up or down based on the overall interest rate market (hence, money market)
The less-good:
Often require a minimum balance, so consider whether you’re earning enough (or spending infrequently enough) that you can keep, for example, $500 in the account at all times
3. Online Savings Accounts
The good:
Basic like your bank savings accounts, AND offers higher interest rates (can be around 2%). How? Because they don’t build physical banks which saves them money, so they can afford to pay you higher interest
The less-good:
No physical location for you to march into, so you email or call with questions. You decide if that matters to you
You deposit money digitally (direct deposit from your employer, or take a photo of your check) so make sure you’re comfortable with that