What Kind Of Savings Account Should You Open?

“Save, save, save!” At Promocodes.com, this is the mantra that we strongly believe in.

You should always make sure that you have enough saved up for a rainy day (aka an emergency fund.) It’s also important to save so that you can get closer to your goals (i.e. saving up for a mortgage, putting money aside for a lifetime trip, saving up to relocate, putting money into a pension pot or saving up for a car).

However, with the amount of savings accounts available, and the different types that are out there, it’s hard to know the right one to choose that’s suitable for you, so we’ve compiled a savings account guide that will help explain each type of savings account in a nutshell.

piggy bank

Bank savings account

Commonly, people save via a savings account run by the bank. A standard savings account can be set up at your local bank and it’s pretty easy to do. Most bank's savings accounts require a small deposit (e.g. $1) to set up and to get started, so you don’t need a lot of money to start saving. Setting up a bank savings account is also almost instant, as you can apply via online banking and pay the initial deposit. There are different types of savings accounts that banks offer (such as regular savers and ISAs). Depending on the savings account you opt-in for, you may be allowed a certain amount of withdrawals (or none at all) and you are unlikely to incur bank charges and fees.

Different types of bank accounts include student savings, child savers, 401k management accounts and health savings.

coin bucket

Credit union savings account

A credit union is a financial not-for-profit organization and it’s a good financial option for those who want to borrow and save money at low-interest rates. Credit unions are usually aimed at those who require advice on financial management and they are usually set up in areas where income is typically low or where there’s a lack of awareness in handling money, but usually, anyone can set up an account with the credit union regardless of their income or financial circumstances, including a savings account.

A credit union savings account is easy to set up as long as you follow specific stipulations. For example, a credit union may require you to be residing, working or studying in the area in order to be eligible. A credit union savings account will normally require a low deposit (e.g. $1).

As credit unions work as a co-operative, setting up a savings account with one means that you are part of a community organization. In effect, you’re a member, not simply a customer.

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Certificate of Deposits (CDs)

As defined by The Balance, a certificate of deposit “is an agreement to deposit money for a fixed period with a bank that will pay you interest.” Normally, you won’t be charged monthly fees for a CD and unlike some bank accounts, you cannot withdraw money from a CD for a certain period of time. The main benefit of CDs is that your savings increase regardless of the condition of the market because the money you deposit into a CD grows because of interest. Combine that fact with the stipulation that you cannot take your money out during a set period of time, you can be sure to save up to major financial goals in the long-term with a CD, and they are FDIC insured so your savings are protected.

Saving apps

Want to save and monitor your funds on the go? Then you can save money using savings apps. Savings apps help you to set a financial goal and a deadline, and they will send regular prompts to remind you to put money aside so that you can reach your goals and be held accountable.