There are over 10 types of savings accounts offered by various financial institutions. See below for different types.
10 Types of Savings Accounts
Savings Deposit Accounts
When you first start working you may not want to deal with the responsibility of opening a savings account and putting money into it.
It is important to begin saving as soon as possible and this is where a savings deposit account can be helpful. A saving account is probably the most known type of savings accounts. A savings account is essentially a place to put your money so you are able to have it there when you need it.
The interest rates are higher than a checking account depending on the bank you choose, so the more money you have in the account you will be earning more. There are some banks that offer different features, like the ability to have your online banking through your phone. It is always best to do your research before choosing where to open your account.
In addition to a competitive interest rate, you may find that your savings account is insured-up to $250,000
Jumbo Savings Accounts
There are a lot of great features in a Jumbo Savings Account. For example, a Jumbo Savings Account is a lot safer than a traditional savings account because you will have a higher deposit limit.
The amount of money that is deposited in a Jumbo Savings Account is insured up to $250,000. Another benefit of a Jumbo Savings Account is that you will have a higher interest rate.
A Jumbo Savings Account is a good choice for you if you have a lot of saved up money and you want to earn a high rate of interest. One disadvantage of a Jumbo Savings Account, one of the 10 types of savings accounts is that they have a monthly service charge.
You will have to keep a minimum balance in the account every month in order to avoid
Rewards Savings Accounts
Start with a good opening statement Rewards savings accounts are a good investment alternative. Rewards savings accounts require a minimum investment, which is a great way to save a little extra for a rainy day.
List the benefits of the account Rewards savings accounts offer a great place to store money for a future emergency. The account offers a competitive interest rate and there is no limit on the number of withdrawals that can be made from the account.
Discuss ways to maximize the account’s benefits If you have a rewards savings account, you’ll want to take advantage of the rewards by making sure to take advantage of them as soon as you have them. Cash back is a great way to maximize your investment. Reward savings accounts are one of the lesser known types of savings accounts.
Money Market Accounts
Money Market Accounts are savings accounts, but come without a regular monthly statement and with a higher interest rate than a regular savings account.
Money Market Accounts offer a rate of return and regular deposits, but do not require a minimum balance and can be funded by check or via electronic transfer. There are many benefits of Money Market Accounts. Money Market Accounts are perfect for people who have irregular incomes, are saving for a long-term goal, or are saving for retirement.
Money Market Accounts are perfect for someone who is saving for a long-term goal.
Student Savings Accounts
Student Savings Accounts are a great way to save money for higher education. Savings accounts are one way to do this.
If you are a minor, your parents or guardians can open an account with you.
There are many benefits to this, one of which is that it can help boost your credit score. – Unlike retirement funds, the funds are not taxed if they are used to pay for qualifying educational, but it is important to note that they are taxed if they are not used for this. – There are also risks to the account.
One of which is that all funds are federally insured up to $250,000 in each Savings account in the United States in case of bank failure.
Certificates of Deposit
Certificates of Deposit are a form of savings held in banks. They are called CDs because usually you have to leave the money in the bank for a fixed period of time, usually six months or a year, to earn a fixed rate of return.
This fixed rate is higher than the average rates a bank pays on a regular savings account. Generally, a bank will pay a fixed rate on a CD for a fixed period of time between three months and five years, although longer time frames are not uncommon.
You can’t withdraw from a CD before the CD matures. There are early withdrawal penalties that you’ll have to pay if you withdraw money from a CD before it matures. CD as they are commonly referred to are a well known types of savings accounts.
College Savings Accounts (529 Plans)
529 plans, created by the states and managed by the states, universities, and nonprofit scholarship-ruling organizations, are tax-advantaged college savings vehicles that allow parents and anyone over the age of 18 to save money for future education expenses.
With a 529 plan, contributions are not deductible from federal income tax purposes. However, earnings typically grow tax deferred and distributions don’t have federal income tax consequences as long as they are used for qualified educational expenses.
This is a great way to take a proactive approach to saving for a child’s education.
Individual Retirement Accounts
The Basics of IRAs If you want to avoid a tax burden when you retire, one of the best ways to do this is to contribute to a retirement account that offers a tax advantage.
One such option is the IRA. IRAs provide a great way to enjoy a tax advantage on retirement savings. In most cases, contributions to an IRA are tax deductible, and there may even be a reduction in taxes on your earnings.
There are some qualifications for who can contribute to an IRA, but one of the biggest advantages of an IRA is that once you make an initial contribution, you can make subsequent contributions on a tax-deferred basis. There are specific rules and regulations to the contribution limitations for IRAs.
401(k) Retirement Plans
401k Retirement Planning Many people are not aware of the many benefits of 401k retirement planning. The 401k provides many advantages, but before starting or changing your 401k plan, it’s important to understand the details about how these plans work.
Employers with over 100 employees are required to provide a retirement plan, which is often a 401k. This type of plan offers employees the ability to contribute on a pre-tax basis, which is a benefit of having a 401k.
The advantage of this is that the employee does not have to pay taxes on the money they contribute. As a result, the worker will pay less in taxes on that money when they withdraw it at retirement.
Health Savings Accounts
The Health Savings Account (HSA) is a medical savings account that helps Americans take charge of their health by saving money for medical expenses.
This type of account is designed to save money from before-tax wages to cover medical expenses, up to a certain amount, by depositing the money in a savings account. HSAs are a retirement-savings vehicle.
If a person decides not to participate in a HSA, they forfeit a significant benefit to their retirement fund. This is especially important for people who have chronic medical conditions and have a higher risk of incurring costs for their illness after retirement. This is probably one of the least known types of savings accounts.
As seen above there are numerous types of savings accounts and each offers something different dependent our objectives.