Fact checked! This material was written by an expert

5 min read 27.09.2021 615
Ibrahim Busari
Ibrahim Busari
Ibrahim is a fintech writer at AskWallet
The 6 Best Savings Accounts To Take Charge Of Your Savings Goal

The 6 Best Savings Accounts To Take Charge Of Your Savings Goal

Savings accounts should be considered if you want to save money for an emergency or if you want to save money to purchase a property. However, there are several types of savings accounts, and it is critical that you select the one that best meets your financial needs. This askwallet blog post will serve as an introduction to the 6 best savings accounts.

Saving money is one of the most important ways to achieve financial freedom. However, just saving money in a jar wouldn’t cut it. You would have to find a secure place for the money that you are looking to save for the future. The answer is savings accounts, savings accounts are great for short term goals and long term goals as well. 

Whether you are looking to save up some money for an emergency or trying to save up to buy a home then you should be looking at savings accounts. However, there are different types of savings accounts and it is of utmost importance for you to  pick the one that fits your financial needs.

We will take a look at the top 6 savings accounts that you can choose from, their pros and cons and you can compare for yourself which one is right for you?

Types of Savings Accounts

Traditional or Regular Savings Account

This is the entry level savings account that can be found at any online banks and traditional banks with varying interest rates. People who are looking to save money for long term or short term goals and who aren’t too worried about receiving the best interest rates might find this as the best savings account for them. 

Traditional savings accounts are popular among consumers because of their low minimum deposits. Although this low minimum deposit affects the interest rate that you can get on the account. This account also allows for upto 6 free withdrawals per month (depending on the bank it could include or not include ATM withdrawals). 

High-Yield Savings Account

This is a type of savings account that offers its holders a high APY. What does APY mean? It means Annual Percentage Yield or in other words, the real rate of return earned on an investment, taking into account the effect of compounding interest. So if you are someone looking for a savings account with a more competitive compounding interest rate while paying less in fees, then this is the right savings account for you.

If you are looking for a bank with high-yield savings accounts before you start looking at your local banks, we can tell you that online banks offer higher-yield savings accounts than their traditional counterparts. The reason online banks offer higher-yield is because they are looking to attract users to use their services. Check out our list of the best online banks.

Choosing an online bank's high yield savings account allows you to take control of your funds and savings. Also, you can easily check on your account from the comfort of your home using the online banks mobile app or website.

Money Market Accounts

A money market savings account is one that combines the features of a traditional savings account with the ones of a checking account. These types of savings accounts can be interesting to people who want access to their money while still earning interest on savings. You can easily find a money market account at your local banks as well as online banks, however as we said earlier, if you are looking for better rates than you would have to go online. 

When applying for a money market account, you should know that fees are also imposed on withdrawals. However, you will get 6 free withdrawals per month just like with the regular and high-yield savings accounts. 

Certificate of Deposit Account

This type of savings account is one that allows you to leave your money in a savings account over a set period of time. During that time, interest will be accrued and once the time is up you can withdraw your savings. People looking to get good rates and do not need to have immediate access to the funds might look to certificates of deposit accounts for their savings needs. 

Most brick and mortar banks as well as online banks provide a version of certificate of deposit accounts. Online banks do provide better interest rates to their customers because competition is very steep in the online banking space. The most popula set period for certificate of deposit accounts ranges from short periods like 30 days to longer periods. Obviously , if you were to choose the longer term period then you will be provided high interest rates.

Certificate of deposit can help you maximize your savings if you have funds that you are not in need of immediately. Keep in mind that with this type of savings account , you will be penalized for withdrawing your funds before the maturity date. 

Note: The maturity date is the end date of your CD period. When the term duration expires, savers can withdraw their savings without penalty.

Cash Management Account

Calling cash management accounts savings accounts might be a stretch. This type of account allows you to keep funds for future investments. Whether you plan on investing in a taxable brokerage or end up putting it in a retirement account. This account works great for people looking to have money on ready-to-make investments. 

Cash management accounts are offered by online brokerages and online investment platforms. You can also find them at traditional banks as well. The funds that are deposited into this account with an online brokerage will normally get you a better interest rate than at your local bank.

Specialty Savings Account

This type of savings account is targeted towards people who have particular savings goals instead of just having an account to save the money that you don’t plan on using. These accounts are also targeted towards a subsection of people rather than goals. There are different special savings accounts that can be found at online banks and traditional banks alike. 

Some of the types of specialty saving accounts include:

  • Traditional and Roth Individual Retirement Accounts
  • Student savings accounts
  • Kids’ savings accounts and many more 

If you have a specific reason for saving money, opening a specialty savings account may make sense. Just bear in mind that there may be limitations on when and how you might withdraw your cash in the future.