Wednesday, 25 April 2012

Types of Savings accounts? Who knew...

Guest Post

   Maybe I am just young and naïve, but I never realized that there were different types of savings accounts. I just assumed that they were all the same. You go to the bank you put your money in an account that is not as easily accessible as say, a checking account, and the money accumulates a very small amount of interest as it sits there. I didn't really think there was a whole lot more to it outside of that. Apparently, I was pretty wrong... The savings account that I always pictured in my head is sometimes called a “passbook savings account”. This perfect for some one young, especially students, who don't really have a ton of money. They generally don't have a minimum balance, or if they do, it's usually pretty low. On the flip side of that, the interests rates are also pretty low. You won't really be making much money with such low rates on a small sum of money. Still, if you're like me, and spend anything that ever gets deposited in your checking account, its not a bad idea to have a safe place to store the money you want to save up. Another option is something called a “money market account”. In a money market account the interest rates are generally higher, but you also need to keep a high minimum balance. There are also sometimes restrictions about the number of withdrawals that can be made in a single month. You can open a savings account from a bank or from a credit union. You should always make sure to find out if there any fees associated with the account too. Some places charge you a monthly fee no matter what, while others charge you a fee only if your balance goes below a certain number. It's good to know I have options now. The “passbook” account I had when I was younger was fine at the time, but now that I know there is more out there (and now that I am starting to be able to put away more money) I am starting to wonder if it is still my best option.

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