A Beginner's Guide to Savings Accounts

Understanding the differences between regular savings accounts, money market accounts (MMAs), and certificates of deposit (CDs) can help you choose the best option for your financial goals.

Regular Savings Accounts

Pros:

• Liquidity: Easily deposit and withdraw funds as needed.

• NCUA Insurance: Your funds are protected up to $250,000 per depositor.

• Simple to Use: No complex terms or restrictions.

Con:

• Lower Interest Rates: Typically offers the lowest yields compared to other savings products.

Money Market Accounts (MMAs)

Pros:

• NCUA Insurance: Your funds are protected up to $250,000 per depositor.
  

• Liquidity: Easily deposit and withdraw funds as needed.

Con:

• Lower Rates than a CD: Rates are not as high, but funds can be accessed at any time. 

Certificates of Deposit (CDs)

Pros:

• Higher Fixed Interest Rates: Often provides better returns than savings accounts and MMAs.

• Guaranteed Growth: Fixed rates ensure predictable earnings over time.

• FDIC/NCUA Insurance: Secure up to $250,000 per depositor.

• Various Term Lengths: Choose from short-term (a few months) to long-term (several years) options.

Cons:

• Limited Liquidity: Early withdrawals typically result in penalties.

• Minimum Deposit Requirements: CDs require a $1,000 deposit to open.

Which Option Is Best for You?

• If you need easy access to your money, a regular savings account is ideal.

• If you want higher yields with some liquidity, a money market account might be a better fit.

• If you can set aside money for a longer period and want the best return, a CD could be the way to go.

Choosing the right savings product depends on your financial needs, risk tolerance, and savings goals. Consider factors like interest rates, liquidity, and account restrictions before making a decision.

We're here to help you accomplish your financial goals, so chat with a savings expert at Cornerstone who can guide you to the right savings account.

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