When you are planning to set up a financial plan, it is crucial to know the various types of savings accounts out there. This allows you to make an educated decision regarding the storage of your hard-earned cash.
While a savings account keeps the money out of the reach of your everyday spending temptations, it can still be withdrawn with ease in the case of an emergency.
In order to figure out the type of savings account that you should have, read on.
Regular Savings Accounts
Almost every other bank offers a Regular Savings Account to its customers via a quick in-person sign-up procedure or an easy phone sign-up. A number of banks even offer options to kick-start a savings account online.
It is an option that can be established relatively with less hassle and creates a storage vault for savings in virtually no time.
While CIT Bank is one of the few banks that offers a powerful Savings Builder Account with 2.5% annual percentage yield (provided that you fulfill certain requirements), most of the regular savings accounts will offer a low-interest rate. You are eligible for this rate if you carry a bank balance of $25000 at least, or if you build your savings by depositing a minimum of $100 every month.
So in general, you may need a rather more impactful account, if you want to make some significant savings. This brings us to our next type, so read on!
Money Market Accounts
Unlike the Regular Savings Accounts, Money Market Accounts are rather powerful in terms of making money. These accounts are considered as an effective place for your investments primarily because they offer a high liquidity. At the same time, these accounts require a higher minimum balance that can be anywhere in between $100 to $2500 (depending on the bank). On the brighter side, the interest rates happen to be relatively higher. Though, these accounts do impose monthly withdrawal limits that vary from bank to bank.
Talking about banks with the lowest higher minimum for opening a money market account, the CIT Bank certainly tops the list. The Money Market Account at CIT Bank along with their highly powerful Premier High Yield Savings Account carries no monthly fee, and can both be opened online. However, as mentioned earlier, you need to have at least $100 to open these accounts.
Offering an unparalleled 1.85% percentage yield on all the balances on an annual basis, the CIT Bank beats the rest, as the national average APY for Money Market Accounts is around between 0.12%.
Certificates of Deposit (CDs)
Certificates of deposits are one common form of the Savings Account. Essentially, these are certificates that make you eligible to receive periodic interests over a lifetime of an investment. While CDs have a maturity date that lasts from 1 month up to 5 years and more, the longer terms tend to pay the highest rate of interest.
Both variable rate and fixed rate Certificates of Deposits on six months to five years terms are offered at a number of banks such as the CIT. Standard CDs in the case of CIT, however, provide a high APY of 0.72% which usually increase for lengthier terms - the five years term earns up to 1.70%. While at the same time, the national average for CDs over a six months term lies at only 0.23% annual percentage yield (APY).