Bank Products — Savings and Money Market Accounts

Savings and Money Market Accounts

Having some money set aside as savings is an essential element of any financial plan. Establishing a savings plan will help you handle unexpected expenses and achieve your financial goals.

Make sure you have money available when you need it by setting up a savings account. This is the account where you will keep your money—safe and earning interest—for the long term. While your checking account balance will fluctuate as you pay your bills, your savings account should be stable, if not growing at a steady rate. Think of this account as a place where you’ll keep your money and give it a chance to grow.

When it comes to saving, make sure to pay yourself first – don’t wait to save what is left over at the end of the month. You can do this easily by setting up an automatic transfer so that every month or with every paycheck, a certain amount of money goes directly to your savings account.

Like so many things in your financial life there are options. Understanding what those options are and picking the right one will help you earn the best return on your money and meet your short- and long- term financial goals.

Did you know? You can put your money to work for you through the beauty of compound interest. Compound interest is like a snowball effect – you earn interest on the amount you deposit into your savings account and then in the next period, you earn interest on the original deposit plus the interest you earned last period. Compound interest accelerates your savings and can have a big impact over time.

Savings options:

Keeping a savings or money market account is a smart option for money that you might need to access quickly, such as your “in-case-of-emergency” funds. A good rule of thumb is to keep enough money in a short-term savings account to cover at least three to six months’ worth of your living expenses. This will give you some room to breathe if the unexpected occurs such as job loss or illness.

Basic savings accounts are “no-frills” accounts and tend to pay a lower interest rate, but will usually have either no minimum balance requirement (or a very low one). While your money isn’t going to grow quickly, a basic savings account can help:

• Keep your money safe and accessible in case you need it
• Get you in the habit of saving
• Get you a better on a checking account or other service at your bank

High-yield savings accounts by definition offer higher interest rates than most standard savings accounts with some interest rates that can rival more restrictive options like CDs. While they offer stronger rates, they may not offer the convenience of ATM/debit access or check-writing options. With these accounts, it can take time to transfer money between accounts, which can be a challenge if you need access to your money quickly.

Money market deposit accounts generally pay a higher interest rate than typical savings accounts, and allow for easy – although limited – access through checks, money transfers, and even ATMs. (Check withdrawals are usually limited to less that 6 per month.) Money market deposit accounts sometimes require you to maintain a higher minimum balance. If your account falls below the minimum required balance, or if you exceed the limit on transactions, you might pay a penalty. A money market account can be a great choice if you want to consolidate your accounts at one bank.