Savings Account Rates

One of the most common types of accounts is a savings account. A savings account is a kind of account designed to hold money that you do not need to access immediately. Such accounts may require a small minimum balance or no minimum balance at all. This depends on the financial institution and the type of account. Besides helping you save money, savings accounts also ensure your money is protected by insuring it. This means that if the credit union or bank goes out of business, your money will remain safe. In addition, money kept in a savings account earns interest. Interest on savings accounts is normally compounded and paid monthly.

There are several types of savings accounts. These include bank savings accounts, money market accounts, certificates of deposit, and money market funds. A bank savings account is insured, and therefore a safe place to keep your money. A money market account refers to a premium account or a high interest savings account. This type of account can be opened at either banks or credit unions. With these accounts, the bank normally pays a higher rate of interest than for ordinary savings accounts. Just like other bank accounts, money market accounts are also insured. Certificates of Deposit (CDs) are debt instruments offered by financial institutions. This type of account retains your money for a particular period of time ranging from one month to several years. However, unlike an ordinary savings account, you cannot withdraw your money as often you wish. Early withdrawal will lead to a penalty. Money market funds are almost similar to bank savings accounts. A money market fund is a mutual fund that invests in cash or cash equivalent securities, also referred to as money market instruments. These investments are short term, liquid investments with a high credit quality. They include treasury bills, commercial papers, repurchase agreements and bankers’ acceptances.