6 Types Of Savings Accounts

Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in, for example, a deposit account, a pension account, an investment fund, or as cash. Saving also involves reducing expenditures, such as recurring costs. Saving does not automatically include interest.

In general, it’s all coming from the same place (your income), so as long as you put a plan in place and stick with it, it doesn’t technically matter whether you count your savings as a bill or an expense.

• Traditional or Regular Savings Account.
• High-Yield Savings Account.
• Money Market Accounts.
• Certificate of Deposit Account.
• Cash Management Account.
• Specialty Savings Account.

An emergency fund is the first and most important type of savings account you should have. Your emergency fund should have enough money in it to cover three to six months of living expenses, but it’s OK if you have to slowly work up to that amount.

Savings accounts limit the number of withdrawals that can be made each month. Savings accounts may require you to maintain a minimum balance to avoid paying a fee. Savings accounts are best used to store money for longer-term goals.

However, banks actually rely on a fractional reserve banking system whereby banks can lend more than the number of actual deposits on hand. This leads to a money multiplier effect. If, for example, the amount of reserves held by a bank is 10%, then loans can multiply money by up to 10x.

Your available balance is the amount of money in your account to which you have immediate access. Your available balance will be different from your current balance if we have placed a hold on your deposit or if an authorized credit or debit card transaction has not yet cleared.

The word deposit means to place something somewhere. As a financial term, a deposit is money you’ve placed in a bank for safekeeping or in any other type of account. When you deposit money, you put it into the bank.

Commercial Banks are often called full-service banks because they offer a wide range of financial services like checking accounts, savings accounts, individual and business loans, and other services.

Interest is calculated as a percentage of a loan (or deposit) balance, paid to the lender periodically for the privilege of using their money. The amount is usually quoted as an annual rate, but interest can be calculated for periods that are longer or shorter than one year.

What is Bad Interest? Bad interest is associated with high-interest rates and is usually the result of a revolving line of credit where the items you purchase have little value. These purchases are seldom considered necessities. An example of this would be store credit cards.

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