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Unlocking the Vault:

Exploring Savings Accounts

APEF: Solving the Financial Illiteracy Crisis

In this series, we’ve already covered your basic banking options and types of accounts, but saving money is such a crucial component of financial security that we’re going to take a little bit of a closer look at savings accounts. Understanding these different types of accounts will allow you to make informed decisions regarding where to stash your cash. Let's take a peek at the most common forms of savings accounts:

Traditional savings accounts are offered by banks and credit unions and are one of the more typical savings options available today. They generally have low minimum balance requirements (which is great, especially when you’re just starting out), but their interest rates are pretty low. These accounts provide easy access to your funds while keeping them safe, just don’t expect to earn much in interest.

High-yield savings accounts work similarly to traditional accounts but offer (you guessed it) higher interest rates. You’ll often find this as an option in online banks, but traditional banks sometimes offer them too. You’ll notice that they tend to require higher minimum balances, so if you frequently pull funds from savings and at times have a low balance this may not be the best option for you. However, if you know you can maintain a required balance and want an easy and safe way to grow savings without taking on additional risk, check out high-yield savings accounts!

Money market accounts (MMAs) offer the best of both savings and checking accounts by offering higher interest rates than traditional savings accounts, check-writing privileges, and ATM access. Although money market accounts require larger minimum balances upfront to open and maintain, their higher yield might just make the effort worth your while. We’ll do a deeper dive into MMAs in another article.

A Certificate of Deposit (CD) is a time-based savings account which offers fixed interest rates over a specific timeframe, typically from several months to multiple years. CDs usually offer higher yields than savings accounts but require you to lock away your money for the duration - if you make any withdrawals before maturity (AKA the agreed-upon completion date), you may have to pay penalties.

Although created specifically to save for retirement, Individual Retirement Accounts (IRAs) offer tax advantages that can help your money grow faster. Traditional IRAs allow tax-deferred growth - meaning taxes won't be payable until you make withdrawals in retirement; Roth IRAs provide tax-free withdrawals, but contributions must be made using after-tax dollars.


Custodial accounts are savings accounts opened on behalf of minors by an adult in the minor’s name until they reach the proper age to manage his or her own accounts. Custodial accounts are often used for college savings or financial gifts.

When you select a savings account, carefully consider factors like interest rates, fees, minimum balance requirements, and accessibility.


Remember your savings goals- a traditional or high-yield savings account may provide the best access in the short term, while CDs or retirement accounts offer potentially greater returns for long-term goals (as long as you won’t need that cash for a while). From emergency funds and future retirement accounts, choosing one that is tailored specifically to meet your needs can lead you down the path toward financial freedom. Take time to investigate all available accounts and don’t be afraid to ask questions until you find one that’s the best fit for you.

401k plans, and other retirement funds that are provided by the employer as an additional benefit to the wage or salary provided.

a type of policy that you agree to have with a company. In exchange for paying monthly rates, the company agrees to pay for some or all of your health needs.

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