Rebecca Lake is a certified educator in personal finance (CEPF) and a banking expert. She's been writing about personal finance since 2014, and her work has appeared in numerous publications online. Beyond banking, her expertise covers credit and deb.
Rebecca Lake Banking ExpertRebecca Lake is a certified educator in personal finance (CEPF) and a banking expert. She's been writing about personal finance since 2014, and her work has appeared in numerous publications online. Beyond banking, her expertise covers credit and deb.
Written By Rebecca Lake Banking ExpertRebecca Lake is a certified educator in personal finance (CEPF) and a banking expert. She's been writing about personal finance since 2014, and her work has appeared in numerous publications online. Beyond banking, her expertise covers credit and deb.
Rebecca Lake Banking ExpertRebecca Lake is a certified educator in personal finance (CEPF) and a banking expert. She's been writing about personal finance since 2014, and her work has appeared in numerous publications online. Beyond banking, her expertise covers credit and deb.
Banking Expert Doug Whiteman Personal Finance EditorDoug Whiteman is an award-winning journalist with three decades of experience covering personal finance, starting when he was the Washington, D.C.-based consumer news editor and reporter for Associated Press Radio in the 1990s and early 2000s. He's p.
Doug Whiteman Personal Finance EditorDoug Whiteman is an award-winning journalist with three decades of experience covering personal finance, starting when he was the Washington, D.C.-based consumer news editor and reporter for Associated Press Radio in the 1990s and early 2000s. He's p.
Doug Whiteman Personal Finance EditorDoug Whiteman is an award-winning journalist with three decades of experience covering personal finance, starting when he was the Washington, D.C.-based consumer news editor and reporter for Associated Press Radio in the 1990s and early 2000s. He's p.
Doug Whiteman Personal Finance EditorDoug Whiteman is an award-winning journalist with three decades of experience covering personal finance, starting when he was the Washington, D.C.-based consumer news editor and reporter for Associated Press Radio in the 1990s and early 2000s. He's p.
| Personal Finance Editor
Updated: Aug 7, 2024, 1:14am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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Savings accounts can be safe places to keep the money you don’t intend to spend right away.
These accounts are useful when planning for short-term needs, such as an emergency fund, and longer-term goals like stashing away cash for a down payment on a home.
There are different types of savings accounts to choose from, and they’re not all alike. The options include traditional savings accounts, high-yield savings accounts, money market accounts, certificates of deposit, cash management accounts and specialty savings accounts.
What are the best types of savings accounts, and which types should you have? It depends on your needs and goals.
Knowing how the various savings account options compare can make it easier to select the right place to keep your money.
Annual percentage yields (APYs) and account details are accurate as of April 9, 2024.
Distinguishing between different savings accounts means looking at their features, where you can open them and what they’re designed to do.
As you compare different savings accounts, it can help to ask these kinds of questions:
Doing this kind of research can help you decide which types of savings accounts to have. From there, you can choose where to open them and how to fund them.
Good for: People who need to save money for the short or long term and aren’t as concerned about getting the best interest rate, expressed as the annual percentage yield (APY).
Traditional savings accounts are what you may immediately think of when you consider where to save. These are the savings accounts you typically find at traditional banks or credit unions.
These types of savings accounts generally allow you to earn interest on your money, although they usually pay lower rates than other savings products. Many banks and credit unions allow you to open a regular savings account with a low minimum deposit.
Traditional savings accounts typically allow you to make up to six monthly withdrawals (not including ATM withdrawals or in-person withdrawals at a branch) before incurring a penalty. The relaxation of Regulation D restrictions in 2020 removed the six-withdrawal limit, although your bank or credit union still has the right to charge you a fee for exceeding the monthly limit.
Banks and credit unions may allow you to manage your account online, via mobile banking, by phone or at a branch.
If your bank is insured by the Federal Deposit Insurance Corporation (FDIC), then your deposits are insured for up to $250,000 per depositor, per account ownership category, in the event of a bank failure. The National Credit Union Administration (NCUA) provides similar insurance for federally chartered and most state-chartered credit unions.
Good for: People who want to earn a more competitive rate on savings while minimizing fees.
High-yield savings accounts—typically found at online banks, neobanks and online credit unions—are savings accounts that offer a higher APY compared to regular savings accounts. This is one of the best types of savings accounts to maximize your money’s growth.
Online banks often offer different types of high yield savings accounts to attract savers who want to earn a better interest rate than what is found at brick-and-mortar banks and credit unions. This type of savings account may be appealing if you’re comfortable managing your account via website or mobile banking versus visiting a branch.
High-yield savings accounts are FDIC or NCUA insured, just like traditional savings accounts. In addition to offering better rates, online banks tend to charge fewer or lower fees, including monthly maintenance or excess withdrawal fees.
Annual Percentage Yield
$1 Minimum to earn APY
rates as of 4/25/2024
Minimum Deposit Requirement
Monthly Maintenance Fee
On American Express National Bank's Website Member FDIC$1 Minimum to earn APY
rates as of 4/25/2024
Good for: People who want to earn interest on savings while having more options for accessing their money.
Money market accounts (MMAs) combine features of a regular savings account with features of a checking account. You can find these accounts at brick-and-mortar banks, online banks and credit unions.
These accounts, which may also be called money market savings accounts or MMSAs, allow you to earn interest on your savings. Rates are typically better than regular savings accounts and some offer rates similar to high-yield savings accounts. You may also be able to write checks from your account or access funds with an ATM or debit card.
Similar to regular or high-yield savings accounts, banks can impose a fee if you make more than six withdrawals per month, even though the relaxation of the federal Regulation D restrictions now allows for readier access to your funds. Going over the monthly limit could trigger a fee or result in the institution closing your account if it happens frequently.
Good for: People who want to earn competitive rates and won’t need to access their savings right away.
Certificates of deposit (CDs) are time deposits, meaning you agree to leave your money in the account for a set period. During that time, your money earns interest and, when the CD matures, you typically can withdraw your savings or roll it into a new CD. That sets these accounts apart from other types of savings accounts since there’s a time factor at work.
You can find CDs at traditional banks and online banks. Between the two, online banks tend to offer better interest rates. CD terms typically range from as short as 30 days or as long as 60 months, with longer terms usually boasting higher rates—although not always, especially in a lower interest rate environment.
CDs are best for the money you know you won’t immediately need since banks can charge an early withdrawal penalty if you withdraw your savings before the maturity date. Creating a CD ladder of multiple CDs with varying maturity dates can offer a work-around for this issue.
Good for: People who want to keep cash available to invest in their brokerage or retirement account.
Cash management accounts are different from other types of savings accounts because they’re not specifically designed for saving. Instead, these accounts let you hold cash you may plan to invest in a taxable brokerage account or a retirement account.
Online brokerages and robo-advisor platforms may offer cash management accounts to their investors. The money held in the account can earn interest, often at a higher rate than what you’d get at a bank.
Depending on the brokerage, you may get all the standard features you’d expect with a checking account as well. For example, you may be able to write checks, pay bills or transfer funds to accounts at your bank.
Good for: People who want accounts tailored to specific savings goals.
Specialty savings accounts are designed to help you reach specific savings goals, rather than being a catch-all for money you don’t plan to spend. And in some cases, they can be intended for a specific type of person, rather than a savings goal.
For example, there are different types of savings accounts for minors. Three types of savings accounts you might set up on behalf of a child or teen include:
You can also set up different types of education savings accounts, including 529 college savings accounts and Coverdell Savings Accounts. These two types of college savings accounts allow you to set aside money for higher education expenses on a tax-advantaged basis.
Then there are different types of retirement savings accounts you could set up for yourself, including Traditional and Roth Individual Retirement Accounts (IRAs) and IRA CDs. Meanwhile, you may also open an account designed to help you save for healthcare: a Flexible Spending Account (FSA) or Health Savings Account (HSA).
Finally, there are other types of savings accounts to have, depending on your needs. For instance, you may open a Christmas Club savings account or a home down payment savings account to hold money for those goals.
You should be able to find most of these accounts at banks, credit unions, brokerages or investment companies. In the case of a Health Savings Account, you’d only have access to one of those if you have a high deductible health plan.
Opening one or more specialty savings accounts may make sense if you have a singular purpose for saving money. Just keep in mind that there may be restrictions on when and how you can withdraw those funds later.
Here are reasons why it can make sense to put money in a savings account:
When choosing a savings account, it’s important to remember that you don’t have to pick just one. Depending on what you want to achieve financially, you may decide to open multiple savings accounts, CD accounts, money market accounts or specialty accounts. To find the best account for your needs, consider your financial goals.
The best savings accounts pay high interest rates, charge few fees and provide the accessibility you need. A savings account with an excellent APY at an online bank or credit union may be the best option for you if you don’t mind forgoing branch banking. Or you may prefer a savings account at your local bank if you prefer in-person banking.
The type of savings account should reflect your financial needs and goals. You may have one high-yield savings account to hold your emergency fund and a money market account to hold money for short-term goals, such as buying a car.
An asset is something that has a positive value, and a savings account falls under this umbrella, assuming it has a positive balance. Savings accounts are generally considered to be liquid assets since it’s relatively easy to convert them to cash. For instance, if you needed money to cover an emergency expense or pay a bill you could withdraw cash from savings or transfer funds from your savings account to a checking account online with just a few clicks of a button.
