Everyone is trying to save money these days. Free spending days are a thing of the past as people try to save every dollar possible. Frugality is today's new buzz word. Deciding where to put the few dollars you save is a challenge. Banks use different phrasing when referring to the various types of savings accounts.
Learning some financial jargon helps victims of domestic violence chose savings options that best meet their individual needs.
Learning some financial jargon helps victims of domestic violence chose savings options that best meet their individual needs.
In general, these are the different type of savings accounts that are available. Some of the savings accounts listed below are insured by the FDIC.
The basic savings account was formerly called a passbook account. The customer was given a ledger call a passbook to record the deposits they made. At the end of the month the customer could balance this total with the bank.
Funds deposited in this type of account earn a minimal amount of interest. It is insured. Unlike other accounts the funds may be accessed swiftly and without penalty.
Certificates of Deposit (CD)
A CD requires customers to invest a minimum deposit in a financial institution for a set amount of time. Funds that are withdrawn early are subject to fees and are not accessible by check or debit card. Certificates of Deposit earn a higher interest rate than a basic savings account and are insured.
Money Market Account
A minimum investment is required to earn interest on this type of uninsured account. The bank then invests the money in government bonds or other securities. The interest that is paid on a money market account is determined by money markets. It usually higher than a basic savings account. Customers may write a check from this account based but there are restrictions and possible fees to do so.
Christmas Club Account
These are becoming less common. Deposits are made on a regular schedule beginning early in the year. Later in the year these funds are available for holiday shopping. A small opening balance is required and there are no fees to withdraw funds early. Minimum interest is paid.
High Yield Bank Accounts
These high risk accounts can pay a higher interest rate than other types of savings accounts. A minimum investment is required and restrictions are placed on the account. These are uninsured.
Share Accounts
A Credit Union membership is required. Because every member owns a share in the credit union savings accounts here are called share accounts. They are essentially the same as a basic savings account. Because of member ownership the interest paid may be slightly higher here than at other types of financial institutions.