Compare Savings Accounts

A savings account is a useful tool for managing your money, helping you save for goals and earn a little bit of extra money through interest. Here's a breakdown of how it works:

• Deposits: You deposit funds into your savings account, this is your principal, the starting amount that will grow over time.
• Interest: Savings accounts earn interest on the money you deposit. The interest rate is typically a small percentage, but it allows your money to grow gradually over time. Interest is usually compounded, meaning the interest you earn also earns interest in future periods.
• Withdrawals: Unlike a checking account, there may be limitations on how many withdrawals you can make from your savings account each month. This is to encourage saving and discourage using it for everyday spending. However, you can usually access your money easily through an ATM, online banking, or by writing a check (depending on the bank).
• Safety: Savings accounts at FDIC-insured banks are insured for up to $250,000 per depositor, per insured bank, for each ownership category. This means that even if the bank fails, your money is safe up to that amount.

Overall, a savings account is a good option for saving money for short-term or long-term goals, where you might need to access the money occasionally. They offer a safe place to store your cash, some growth through interest, and reasonable access to your funds.

You should keep three to six months' living expenses in your savings account, plus a bit extra. Most experts recommend saving enough money to live on for the amount of time it would take you to find a new job if you were to lose yours and adding a little more for emergencies.

How to Determine How Much You Need to Keep in Savings

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The key differences between a high-yield savings account and a CD are the money access and the interest rates. Understanding these key differences will help you make an informed decision about which account best aligns with your saving goals and liquidity needs.

How High-Yield Savings Accounts and CDs Compare

You should have at least two savings accounts, one for short-term goals and the other for long-term savings. Also consider opening and maintaining a savings account for each of your savings' goals, like an emergency fund, retirement, or a down payment for a house.

The average American has five bank accounts, according to a study by Mercator Advisory Group. Having multiple accounts can help you budget more efficiently and create a structure to reach...

The difference between a high-yield savings account and investing is a high-yield account preserves capital and earns modest interest income, while investments are more of a risk but have the potential for greater returns. So, savings accounts are used to store cash, and investments are employed to grow money.

High-Yield Savings Accounts vs. Investing