<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1460686050826651&amp;ev=PageView&amp;noscript=1">

Types of Savings Accounts: How to Pick Your Perfect Match

Jan 03, 2024
Asian woman studying at home using laptop

Finding the best Savings Account combination to achieve your long- and short-term goals may feel overwhelming. While there are many types of Savings Accounts available, some deliver a greater return on investment, while others deliver greater flexibility when it comes to accessing your funds. Explore the various savings account options and their perks to find the perfect match for your savings goals.

Common Types of Savings Accounts

Life is unpredictable, and being prepared is essential to staying ahead of the financial curveballs that may get thrown your way. Challenges like temporary employment loss, unexpected medical bills, and even having a large appliance break causes financially driven stress and anxiety. When people have cash reserves and savings set aside in a Savings Account or emergency savings fund, facing these financial challenges is easier. When it comes to selecting the best savings account for your needs, it all starts with understanding the sometimes subtle differences between Saving Account options to help you make an informed decision.

Traditional Savings Account

Although Savings Account interest rates tend to vary, traditional products generally offer the lowest interest rates when compared with other savings options. That’s primarily because people who place their funds in these accounts aren't necessarily ready to commit to maintaining a high balance. Therefore, the return on investment is somewhat limited compared to options with higher rates. However, the benefits of traditional Savings Accounts make them a vital part of a comprehensive, long-term financial plan.

  • Convenience: A traditional Savings Account can be digitally linked to a checking account. This benefit allows you to increase your savings balance or move money to cover bills paid through your checking account.
  • Minimum Balances: Credit unions typically require low minimum balances. In many cases, all you need to leave is $5 in the account to keep it open. 

It’s not uncommon for people to employ traditional Savings Accounts as a vehicle for money if they aren't ready to commit to a long-term, high-balance product. By that same token, they remain excellent options for direct deposits, those looking to build an emergency savings fund, and a placeholder for growing savings before investing it elsewhere.


Budgeting and managing your money has never been easier!

Download Our Free "3 Practical Budget Templates That Actually Work!"


Money Market Account

Money Market Accounts offer you the chance to earn more on your savings, while still allowing access to your money when you need it! In many ways, Money Market Accounts are hybrids that provide benefits found in Savings and Checking accounts. In many cases, people who place their money in money market accounts earn higher interest rates than traditional Savings and Checking Accounts. These are definitely things to keep in mind when considering a money market account.

  • Interest Rates: The initial interest rate may increase or decrease based on market conditions. However, the return on investment is typically higher than other flexible savings options in their class.
  • Convenient Access: Enjoy easy access to Money Market funds through checks, electronic withdrawals, or transfers.

While Money Market accounts are a great option for many looking to build their savings, be sure to check any minimum balance requirements and how earnings are tiered. Typically higher balances result in higher dividend rates (earned interest). 

Term Share Certificates (or CDs)

Sometimes referred to as a Certificate of Deposit or CD, a term share certificate offers guaranteed interest rates based on the length of time or term you select and your deposit amount. The money must remain in the Term Share Certificate (or CD) until its maturity date arrives. Term Share Certificates can offer significantly higher interest rates than traditional, high-yield, and Money Market accounts, largely because the funds remain in the account for an extended period of time. These are key things to know about Term Share Certificates (or CDs).

  • Interest Rates: Term Share Certificates (or CDs) provide fixed interest rates with a predictable profit. These rates do not fluctuate, and cannot be changed while funds are maturing. Your earnings may be impacted if you withdraw your savings before the Term Share Certificate (or CD) matures.
  • Terms: There is a wide range of Term Share Certificate (or CD) rates available. Depending on your comfort level, funds can usually be invested for 6 months, 1 year, or several years.

It's not uncommon for people to select multiple certificates at different terms to diversify their savings and allow for access to their money over time, should the need arise without breaking their initial terms.

Why is a Savings Account Better Than a Mattress?

The difference between investing your money into a credit union versus a mattress is interest. Your money doesn’t accumulate or provide you with a return on your investment when it's hidden at home. If you're concerned about safety, rest assured that depositors at Peach State are covered up to $250,000 through the National Credit Union Share Insurance Fund and are also insured for up to an additional $750,000 with coverage by Excess Share Insurance Corporation (ESI), a licensed insurance company, for a combined coverage of up to $1,000,000.

How to Select The Right Savings Account

When investing funds in Savings Accounts, these are things to consider when crafting a comprehensive savings plan.

  • Create A Budget: Understand how much money you're starting with and discover how much savings you can “live without” to help you decide which savings options and terms will best fit your needs.
  • Compare Costs: Always research which savings account options feature minimum balance requirements and possible monthly fees.  
  • Determine Flexibility: Your savings account selections should be based on the frequency you may need to access those funds. If you're not ready to live without your money for longer periods of time, a term share certificate (or CD) may not be the best option for you.
  • Balance Your Plan: Coordinate short- and long-term investments based on your anticipated needs and goals.

If you're having trouble finding a savings strategy for your unique financial situation, it may be worthwhile to speak with a professional.

Peach State Has The Right Savings Account for You

If you're trying to save money for retirement or build an emergency fund, Peach State has the solutions to help you achieve your goals! Opening a traditional Savings Account with $5 at Peach State not only gives you access to all our products and services, but makes you a member-owner of the credit union.

Our Savings Accounts, Money Market Accounts, and Term Share Certificates (or CDs) are sure to provide a successful combination for your needs. If you don’t know where you'll be able to find savings in your current financial plan, download Peach State’s free budget templates!

If you're unsure which Savings Account is best for your unique timeline, explore our free financial resources or contact Peach State today!

While many types of savings accounts exist, finding extra savings in your budget is the first step in getting a return on your investment. Download our free "3 Practical Budget Templates That Actually Work!" Guide to find potential savings options you may be missing.

Subscribe to Dollars & Sense: