Saving Vehicles
A savings vehicle is a bank account that's used to hold your savings. The basic saving vehicles include but are not limited to: savings accounts, money market accounts, and certificates of deposit.
Savings Account
Savings accounts are the most basic kind of savings vehicle. They give you less access to your money than checking accounts so you're less tempted to spend the money. Most banks pay interest on the money held in the account, and that interest compounds over time. It is important to notice any fees or charges that these accounts may have. Also, it is beneficial to ask if there are any other ways to keep track of the money in your savings account, such as a website or a mobile app.
Money Market Account
A money market account is a deposit account that's part checking and part savings, meaning you can write checks from this account, but there are restrictions as well. These accounts MAY offer higher interest rates than savings accounts, but in exchange they might require a high minimum balance. As in most cases, the bigger the balance, the bigger the interest rate.
Certificate of Deposit
A certificate deposit of is a deposit that is held for a specific term, such as three months, six months, one year, or even longer. During the term, the bank pays interest to you on your deposit. Each CD has different terms around how much you'll earn and when you can take out your money. Typically, the longer you let the bank keep the money, the higher your interest rate, which means you'll wind up making more money. Because of this, interest rates on CDs tend to be higher than savings accounts. The only thing to keep track of is that you'll be penalized if you withdraw your money early from a CD. Therefore, it is important to plan ahead and make sure you won't be needing the money before the term is over.
Savings Account
Savings accounts are the most basic kind of savings vehicle. They give you less access to your money than checking accounts so you're less tempted to spend the money. Most banks pay interest on the money held in the account, and that interest compounds over time. It is important to notice any fees or charges that these accounts may have. Also, it is beneficial to ask if there are any other ways to keep track of the money in your savings account, such as a website or a mobile app.
Money Market Account
A money market account is a deposit account that's part checking and part savings, meaning you can write checks from this account, but there are restrictions as well. These accounts MAY offer higher interest rates than savings accounts, but in exchange they might require a high minimum balance. As in most cases, the bigger the balance, the bigger the interest rate.
Certificate of Deposit
A certificate deposit of is a deposit that is held for a specific term, such as three months, six months, one year, or even longer. During the term, the bank pays interest to you on your deposit. Each CD has different terms around how much you'll earn and when you can take out your money. Typically, the longer you let the bank keep the money, the higher your interest rate, which means you'll wind up making more money. Because of this, interest rates on CDs tend to be higher than savings accounts. The only thing to keep track of is that you'll be penalized if you withdraw your money early from a CD. Therefore, it is important to plan ahead and make sure you won't be needing the money before the term is over.