SAVING & Investing

Basic savings choices

A savings account is when you keep your money in a bank or credit union and the bank pays you “interest” for keeping your money there.

It's Safe: A savings account is a much safer place to save your money for your goals than in cash at your home. When you put your money in a bank or credit union, they keep it in a fireproof locked safe. In a bank, the federal government also insures your money.

It Pays: Banks pay you a fee, called interest, for keeping your money with them. The higher the interest rate, the more money you'll earn.

There are many ways for you to save your money and earn interest. Setting up a direct deposit from your checking account to a savings account each payday makes saving easier. These are some of the most common accounts at banks and credit unions.

Basic Savings Account
The amount of money you need to open a basic account is low, from $5 to $200. Your money earns a low interest rate, but you can put money into your account and take it out whenever you want.

Certificate of Deposit (CD)
A CD will pay more interest than a savings account. A CD is a good idea if you will not need the money soon. You can put it in a CD for 3 – 5 months, 6 – 11 months, a year, five years, and so on. The interest rate is guaranteed for that period of time. The longer a time period you choose, the higher interest it will earn. But if you take out the money before the end of that time, you will pay a penalty.

Money Market Account
A money market account usually pays more interest than a savings account, but less than a CD. But, you can take your money out of the money market account at any time without paying a penalty. You have to make a larger minimum deposit, for example between $500 and $2,500

Click here for more information about different types of savings accounts

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