Where should I keep my money? Consider these 4 bank accounts

Taking the time to consider different types of bank accounts can help you improve your financial strategy. Ready to find the right bank accounts to support your financial goals?

Read on to learn more about the following options:

• Online checking

• Online savings

• Certificates of deposit (CDs)

• Individual retirement accounts (IRAs)

You’ll also learn tips from financial experts on how you can regularly review your finances and determine which types of bank accounts match your goals. In the end, you’ll be able to answer the question, “Where should I keep my money?” with confidence.

Katherine Pomerantz, owner of an accounting and financial strategy firm for small businesses and entrepreneurs, knows how easy it is to get stuck in a financial rut. Putting your finances on autopilot can make it easier to manage bills, pay off debt and save for the future. But if everything runs automatically, you could miss opportunities to make your money work harder for you. Pomerantz says plenty of her clients use a savings account, for example, but she likes to help them look for ways to “double down on growing their income.”

Could you also benefit from taking a fresh look at your finances? Maybe you’ve been putting money in the same types of bank accounts for years but haven’t checked how much you’re earning. Or maybe you’ve increased your salary but haven’t adjusted your approach to saving. Even if you’ve done a great job building your savings, it may be time to review your financial strategy and see if other types of bank accounts could help your money go further.

Ask yourself: Where should I keep my money right now? And where should I keep my savings long term? As you review your answers to these questions, you may decide to move some of your hard-earned money into different types of bank accounts. Here are a few options to consider:

Most people use a checking account because it’s an easy place to store money, pay bills and make small purchases. If a checking account (and debit card) is part of your regular financial routine, you may want to go with an online checking account.

Online checking accounts can offer flexibility and ease of use. Many accounts let you choose options like automatically declining a charge, moving money from savings or covering overdrafts—charges that occur when you spend more than what’s in your account—without a penalty. Find a bank with a large network of ATMs that are free to use. There are more than 70,000 fee-free Capital One and partner ATMs. Add in the ability to manage everything from your phone, and you’ve got an account that feels simple, modern and built for everyday life.

A savings account is a good place for your emergency fund, for example, because the money can be easily accessed when you need it. Interest rates, however, can be lower. Once you’ve saved enough to cover your immediate emergency fund needs, it’s time to ask yourself: Where should I keep my savings?

While interest rates are changing rapidly, online savings accounts may help you earn a better return. They’re similar to the accounts offered by traditional brick-and-mortar banks, but because online banks have lower overhead they often offer higher rates. You may also be able to find accounts that have no monthly fees for maintenance or balance requirements. This means your savings can grow more quickly. For example, 360 Performance Savings offers a high rate to help your balance grow.

When comparing types of bank accounts, consumers may choose to save with a money market account if they find one with a good interest rate and enjoy the flexibility of withdrawing money when needed. Money market accounts can also be appealing when they offer check writing and debit card access. If you’re just keeping your money in a money market account and don’t need to make withdrawals, though, you may be able to earn more with a CD.

With a CD, you agree to leave your money in the bank for a set amount of time. Chelsea Brennan, an investment professional and blogger, says the benefit of saving for shorter-term goals with a CD is that your money is more likely to remain committed to its purpose. Options like a 360 CD allow you to lock in a strong rate that ensures your money is working as hard as you do.

On the other hand, when you can dip into the funds easily, as with a money market account (and some other types of bank accounts), “this only makes it harder to reach your ultimate goal,” Brennan says.

If the answer to “Where should I keep my savings?” leads you to open a CD, note that you’ll be charged an early withdrawal penalty if you take out your money before the CD’s term ends, or its maturity date. You may want to avoid putting your money in a CD if there’s a chance you’ll need it to cover an emergency before it matures.

An employer-sponsored retirement plan such as a 401(k) is an excellent workplace perk, especially if your employer provides a matching contribution. If you want to ramp up your retirement savings, you could consider contributing money to both a 401(k) and an IRA.

Opening a Roth IRA can be a way to diversify your retirement savings and create a tax-free stream of income for later in life, since distributions are tax-free in retirement. However, as you consider where to keep your savings, it’s important to know that contributions to a Roth IRA are limited by income, regardless of whether you participate in other retirement plans. Contributions to a traditional IRA may be tax-deferred, meaning you could pay less in taxes now but would owe them when you withdraw the money in retirement.

Pomerantz works with a married couple who are using an IRA to save for a down payment on a new home. Normally, withdrawing money from an IRA before the age of 59½ means paying a 10% additional tax penalty, according to the IRS. But there’s an exception if the money is being used to buy or build your first home.

Pomerantz says her clients already have retirement savings in employer-sponsored accounts. They were trying to save for a down payment for their first home, but kept dipping into their savings account for other purchases.

“They wanted to open an entirely separate account that they couldn’t withdraw from whenever they wanted,” Pomerantz says. “That’s when they thought of opening an IRA. Their savings grew exponentially.”

If you’ve ever asked yourself, “Where should I keep my money?” it might be time to consider the steps above. Choosing where to keep your money depends on your financial goals, spending needs and timeline. The right mix of accounts can help you access your funds when needed while also giving your savings room to grow. 

Some things to consider:

• Different types of accounts can serve different purposes, from everyday spending to building long-term savings. 

• The best place to keep your money depends on factors including access to it, interest rates and your financial goals. 

• Checking in on your financial setup regularly can help you make adjustments as your needs change.

Looking for a place to keep your money? Consider the 360 Checking, 360 Performance Savings or 360 CD accounts from Capital One.