Financial Products

A savings account is a type of account offered by banks and credit unions specifically designed to help you save money for the future. It’s a great place to set aside funds for short-term or long-term goals, like building a $500 rainy day fund or saving for a big purchase, such as a down payment on a house. When you contribute regularly to a savings account, you not only build your balance but also earn interest on your savings.

Regular Savings Accounts vs. High-Yield Savings Accounts

While a regular savings account typically offers modest interest rates, a high-yield savings account provides a significantly higher interest rate, helping your money grow faster over time. High-yield accounts are often offered by online banks and credit unions, which can afford to pay better rates because they have lower overhead costs.

For example, if you’re saving $1,000 in a traditional savings account earning 0.1% interest, you’d only earn $1 in a year. With a high-yield savings account offering 4% interest, you’d earn $40—making it a more effective tool for reaching your savings goals.

Key Things to Know About Savings Accounts:

• Not for Daily Use: Savings accounts are designed to hold your money, not for frequent withdrawals. Many banks limit you to six transactions per month, and exceeding that could result in fees.

• Risk-Free Savings: Like checking accounts, deposits up to $250,000 are insured—by the FDIC for banks or the NCUA for credit unions—making savings accounts a safe place to grow your money.

• Credit Union Accounts: If you open a savings account at a credit union, it’s often referred to as a share account because it represents your “share” in the credit union.

An online savings account is a savings account that you can access on the Internet, and sometimes only online. Online-only banks often offer competitive interest rates.

It’s now standard for banks and credit unions to offer you access to your savings account from your mobile device or computer. You can often transfer money to and from your online savings account with the click of a button, or deposit checks using the camera feature on your phone.

While an online savings account gives you easy access to your funds, it is not intended for daily use. Many savings accounts are limited to six transactions a month. This means that if you withdraw money from your savings account too often, you could be charged a fee.

A Certificate of Deposit is a savings account that has a fixed interest rate and fixed date of withdrawal. Often certificate accounts offer higher interest rates than traditional savings accounts. The trade off is that certificate accounts restrict you from accessing your savings until a certain date. For example, if you opened a five-year certificate account in 2018, you would not be able to withdraw money from the account until 2023 without paying a penalty, and if you withdrawal after that date you may earn a much lower interest rate. The money you save in your certificate account will accrue interest at the fixed rate you receive when you open the account for the term of the certificate.

Typically, banks offer certificate accounts through a certificate of deposit (commonly known as a CD) and credit unions through a share certificate.

Through www.treasurydirect.gov - where savers can buy electronic (no paper) savings bonds with checking account deductions, 24/7.

A U.S. Savings Bond, Series EE is a savings certificate issued by the U.S. government, rather than a financial institution, that can accrue interest for up to 30 years. You can buy an EE Savings Bond online at treasurydirect.gov. All savings bonds purchased after May 2005 earn interest at a fixed rate. The earned interest is compounded, or added to the bond, each month and paid when you cash the bond.

You can cash your savings bond at any paying financial institution after one year of ownership. If you redeem the value of your savings bond before five years, you will lose the interest earned on it for the past three months.

For more information, click here.

A U.S. Savings Bond, Series I is an electronic savings vehicle that earns interest at variable rates. As of May 9, 2018, U.S. Savings Bonds earn interest at a rate of 2.52 percent. The earned interest is compounded, or added to the bond, each month and paid when you cash the bond.

You can purchase a U.S. Savings Bond, Series I online at treasurydirect.gov. You can purchase a paper savings bond when you file your income taxes.

You can redeem the value of your savings bond after one year of ownership. Your bond can earn interest for up to 30 years. If you redeem the value of your savings bond before five years, you will lose the interest it earned for the previous three months.

To learn more, click here. 

A money market account is a type of savings account that often yields interest at a higher rate than a standard savings account. To open this type of account, you usually have to maintain a higher balance than the standard savings account.

You can open a money market account or fund. A money market fund is an investment vehicle that is not insured by the FDIC, while a money market account is similar to your standard savings account.

You should place the savings you want to access easily in your money market account rather than your money market fund. The interest rate on your money market account will vary depending on the investments available to the bank you’ve opened your account with.

Some money market accounts require you to wait a certain amount of time before you can make a withdrawal. Your money market account will also usually have a six-time monthly withdrawal limit.