Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.While checking accounts are useful for everyday spending on bills, rent, grocery shopping, and the like, savings accounts are ideal for stashing cash you don’t plan to spend right away. After all, savings accounts pay interest, which can help you grow your money faster. That’s especially true when rates are good — and 2023 has some of the best savings account interest rates we’ve seen in years. It’s not unusual to find interest rates on high-yield savings accounts surpassing 4% — 1,600% higher than what you’ll find on the average savings account right now, according to Bankrate.But there are certain situations where interest isn’t the only factor to consider. Ready to get serious about your savings? Here’s a quick look at six types of savings accounts to help you decide where to park your cash in 2023. TIP: The cash you keep in a checking account, savings account, money market deposit account, certificate of deposit (CD), and some cash management accounts is insured up to $250,000 (per depositor, per account type), provided it’s in an FDIC-insured bank or NCUA-insured credit union. Non-deposit investment products (such as stocks, bonds, mutual funds, and crypto assets) are not insured, even if you buy them at an FDIC- or NCUA-insured financial institution.PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSJjYjdiMTc1Yy03YjU2LTRmY2QtODVjZS1kYjcxNjJmZDhmM2UiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LXNhdmluZ3MtbXVsdGkiIGRhdGEtc3ViLWlkPSJodHRwOi8vd3d3LmtjcmEuY29tL2FydGljbGUvYmVzdC10eXBlcy1vZi1zYXZpbmdzLWFjY291bnRzLXJpZ2h0LW5vdy80MzA0NzQ0OSI+PC9kaXY+1. Traditional savings accountsGood for people who make frequent cash deposits or want the option to visit a local bank for in-person help. Traditional savings accounts are the standard accounts brick-and-mortar banks and credit unions offer. The interest rates are low compared to other savings options, and you might pay a monthly service fee (unless you maintain a minimum balance or meet other requirements). Many of the big banks offer interest rates of just 0.01% on traditional accounts. However, these accounts are usually convenient: You can get in-person help, deposit cash, and access your money by visiting a local branch or using your ATM card. TIP: Some banks and credit unions charge a penalty if you make more than six monthly withdrawals from a savings or money market account (excluding ATM or in-person withdrawals). Review your bank or credit union’s withdrawal policy to avoid potential penalties. 2. High-yield savings accountsGood for people who want the best savings account interest rates, low fees, and are comfortable banking online.High-yield savings accounts are available at online banks and credit unions. They offer much higher interest rates than traditional savings accounts, lower fees, and lower minimum deposit requirements. These perks make online banks a terrific option if you want a savings account that maximizes your money’s potential. Still, online banks have few (if any) branch locations, so it can be a hassle to deposit cash or get in-person help when you need it.3. Money market accountsGood for people who want to earn interest and have more ways to access their cash. Traditional and online banks and credit unions offer money market accounts, which combine a savings account’s interest-earning capabilities with a checking account’s flexibility. These accounts usually have a higher minimum balance than other savings accounts, and you might need a larger balance to get the best interest rates. But you can write checks, use your ATM card, and make purchases with your debit card. 4. Certificates of deposit (CDs)Good for people who want competitive rates but are OK parking their cash for a while.CDs are time deposits offered by traditional and online banks and credit unions. You can earn above-average interest rates (online banks offer the best rates) for several months to several years until the CD matures. At this point, you withdraw your deposit and interest or roll it into a new CD at the then-current rate. Early withdrawals usually trigger a penalty, so CDs are best for money you won’t need immediately. PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSIwN2ZiOTg4My0yNzgwLTQ3MjItYmIzZi1mMjBhZWEwYWM1ZWEiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LWNkLW11bHRpIiBkYXRhLXN1Yi1pZD0iaHR0cDovL3d3dy5rY3JhLmNvbS9hcnRpY2xlL2Jlc3QtdHlwZXMtb2Ytc2F2aW5ncy1hY2NvdW50cy1yaWdodC1ub3cvNDMwNDc0NDkiPjwvZGl2Pg==5. Cash management accountsGood for people who want to keep larger amounts of cash safe and readily accessible while earning some interest. Cash management accounts (CMAs) are offered through nonbank financial institutions like brokerage firms and robo-advisors. These accounts typically pay competitive interest rates and let you access your funds via check, ATM and debit cards, direct deposit, and electronic transfer (keeping your funds ready to invest). Another perk: CMAs typically sweep your funds into multiple partner banks, bypassing the FDIC’s $250,000 limit, so all your cash is insured.6. Retirement accountsGood for anyone who wants to save for retirement in a tax-advantaged account. You can open a tax-advantaged individual retirement account (IRA) at a bank, credit union, brokerage firm, or robo-advisor. Savings IRAs typically hold low-risk assets like checking and savings accounts, money market deposit accounts, and CDs — all insured up to FDIC limits. IRAs can also have stocks, bonds, mutual funds, and other investments that can earn a higher rate of return than bank products, but these assets aren’t FDIC-insured. The best savings accounts for 2023The best savings account for you offers a competitive interest rate and the features you want. Here are some tips to help you decide:Traditional savings accounts don’t offer the highest rates, but you can visit a local branch to deposit cash or get in-person help. High-yield savings accounts typically offer the best rates, so they’re an excellent choice if you’re comfortable banking online and have a plan for handling cash deposits. Money market accounts are a good option if you want to earn interest and be able to write checks from the account. CDs offer some of the best rates, but they’re time deposits. Early withdrawals trigger penalties, which can be steep, depending on the bank. Cash management accounts are a good way to store your cash in one place while keeping it FDIC-insured, even if it holds more than the $250,000 limit. Retirement accounts are ideal for long-term savings goals. Traditional IRAs provide an upfront tax break, but you pay taxes on withdrawals in retirement. Roth IRAs don’t offer the upfront tax break, but withdrawals in retirement are tax-free, even on your earnings. Of course, you’re not limited to just one type of savings account. For example, you might want a high-yield savings account to stash money you plan to use in the next year or two, plus a multi-year CD for longer-term financial goals (especially if you can lock in a good rate). Decide how you’d like to use your savings account(s), and then shop around to find the best rates and terms. Remember that savings accounts are just one part of your overall financial picture. Review your investment and retirement accounts regularly to ensure you’re making the most of your money. PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSJjYjdiMTc1Yy03YjU2LTRmY2QtODVjZS1kYjcxNjJmZDhmM2UiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LXNhdmluZ3MtbXVsdGkiIGRhdGEtc3ViLWlkPeKAnGh0dHA6Ly93d3cua2NyYS5jb20vYXJ0aWNsZS9iZXN0LXR5cGVzLW9mLXNhdmluZ3MtYWNjb3VudHMtcmlnaHQtbm93LzQzMDQ3NDQ5Ij48L2Rpdj4= Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.
Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.
Mobile app users, click here for the best viewing experience.
While checking accounts are useful for everyday spending on bills, rent, grocery shopping, and the like, savings accounts are ideal for stashing cash you don’t plan to spend right away. After all, savings accounts pay interest, which can help you grow your money faster. That’s especially true when rates are good — and 2023 has some of the best savings account interest rates we’ve seen in years. It’s not unusual to find interest rates on high-yield savings accounts surpassing 4% — 1,600% higher than what you’ll find on the average savings account right now, according to Bankrate.
But there are certain situations where interest isn’t the only factor to consider. Ready to get serious about your savings? Here’s a quick look at six types of savings accounts to help you decide where to park your cash in 2023.
TIP: The cash you keep in a checking account, savings account, money market deposit account, certificate of deposit (CD), and some cash management accounts is insured up to $250,000 (per depositor, per account type), provided it’s in an FDIC-insured bank or NCUA-insured credit union. Non-deposit investment products (such as stocks, bonds, mutual funds, and crypto assets) are not insured, even if you buy them at an FDIC- or NCUA-insured financial institution.
Good for people who make frequent cash deposits or want the option to visit a local bank for in-person help.
Traditional savings accounts are the standard accounts brick-and-mortar banks and credit unions offer. The interest rates are low compared to other savings options, and you might pay a monthly service fee (unless you maintain a minimum balance or meet other requirements). Many of the big banks offer interest rates of just 0.01% on traditional accounts. However, these accounts are usually convenient: You can get in-person help, deposit cash, and access your money by visiting a local branch or using your ATM card.
TIP: Some banks and credit unions charge a penalty if you make more than six monthly withdrawals from a savings or money market account (excluding ATM or in-person withdrawals). Review your bank or credit union’s withdrawal policy to avoid potential penalties.
Good for people who want the best savings account interest rates, low fees, and are comfortable banking online.
High-yield savings accounts are available at online banks and credit unions. They offer much higher interest rates than traditional savings accounts, lower fees, and lower minimum deposit requirements. These perks make online banks a terrific option if you want a savings account that maximizes your money’s potential. Still, online banks have few (if any) branch locations, so it can be a hassle to deposit cash or get in-person help when you need it.
Good for people who want to earn interest and have more ways to access their cash.
Traditional and online banks and credit unions offer money market accounts, which combine a savings account’s interest-earning capabilities with a checking account’s flexibility. These accounts usually have a higher minimum balance than other savings accounts, and you might need a larger balance to get the best interest rates. But you can write checks, use your ATM card, and make purchases with your debit card.
Good for people who want competitive rates but are OK parking their cash for a while.
CDs are time deposits offered by traditional and online banks and credit unions. You can earn above-average interest rates (online banks offer the best rates) for several months to several years until the CD matures. At this point, you withdraw your deposit and interest or roll it into a new CD at the then-current rate. Early withdrawals usually trigger a penalty, so CDs are best for money you won’t need immediately.
Good for people who want to keep larger amounts of cash safe and readily accessible while earning some interest.
Cash management accounts (CMAs) are offered through nonbank financial institutions like brokerage firms and robo-advisors. These accounts typically pay competitive interest rates and let you access your funds via check, ATM and debit cards, direct deposit, and electronic transfer (keeping your funds ready to invest). Another perk: CMAs typically sweep your funds into multiple partner banks, bypassing the FDIC’s $250,000 limit, so all your cash is insured.
Good for anyone who wants to save for retirement in a tax-advantaged account.
You can open a tax-advantaged individual retirement account (IRA) at a bank, credit union, brokerage firm, or robo-advisor. Savings IRAs typically hold low-risk assets like checking and savings accounts, money market deposit accounts, and CDs — all insured up to FDIC limits. IRAs can also have stocks, bonds, mutual funds, and other investments that can earn a higher rate of return than bank products, but these assets aren’t FDIC-insured.
The best savings account for you offers a competitive interest rate and the features you want. Here are some tips to help you decide:
- Traditional savings accounts don’t offer the highest rates, but you can visit a local branch to deposit cash or get in-person help.
- High-yield savings accounts typically offer the best rates, so they’re an excellent choice if you’re comfortable banking online and have a plan for handling cash deposits.
- Money market accounts are a good option if you want to earn interest and be able to write checks from the account.
- CDs offer some of the best rates, but they’re time deposits. Early withdrawals trigger penalties, which can be steep, depending on the bank.
- Cash management accounts are a good way to store your cash in one place while keeping it FDIC-insured, even if it holds more than the $250,000 limit.
- Retirement accounts are ideal for long-term savings goals. Traditional IRAs provide an upfront tax break, but you pay taxes on withdrawals in retirement. Roth IRAs don’t offer the upfront tax break, but withdrawals in retirement are tax-free, even on your earnings.
Of course, you’re not limited to just one type of savings account. For example, you might want a high-yield savings account to stash money you plan to use in the next year or two, plus a multi-year CD for longer-term financial goals (especially if you can lock in a good rate). Decide how you’d like to use your savings account(s), and then shop around to find the best rates and terms.
Remember that savings accounts are just one part of your overall financial picture. Review your investment and retirement accounts regularly to ensure you’re making the most of your money.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.
This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
