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When you were a kid, you might have saved all your money in a cute, little piggy bank, or maybe your parents opened a savings account that you never really thought too much about. Now that you’re older, it’s time to put your money to work using the deposit account(s) that works best for you. But what are they and how do you choose the one that’s a good fit for you? Don’t worry! We’re here to help! 

Let’s break them down: 

Your basic savings account is exactly what it sounds like: it’s an account that’s supposed to help you save your money. Everyone should have a savings account. Repeat, EVERYONE should have a savings account! However, not all of them are created equal. Some might offer a high annual percentage yield (APY), but require a higher minimum balance. Others might charge fees or ask for an initial deposit amount. Do your research to discover which one suits your needs best. 

In the simplest terms, a checking account is what you use for everyday expenses. You use it to purchase items using a debit card or paper checks (yep, some people still use those!). You can also set up direct deposit so that you can have your paycheck deposited right into your account, or you can set up bill pay to have bills taken directly out of your account.  

But that’s not all, folks! Some checking accounts, such as Reward Checking, are interest-bearing, meaning that you get paid for the money you have in your account! These types of accounts almost always have requirements to receive the interest so make sure to pay attention to the fine print. 

The easiest way to think about a money market is to think of a hybrid between a savings and checking account. It’s a savings account that sometimes offers higher interest than your run-of-the-mill savings account, but lower than some high interest-bearing checking accounts. You receive a debit card and/or checks, just like you would with a checking account, but you are limited to the number of transactions you can have each month. 

If you are okay with not needing quick access to your cash, then this account may work for you. You’re going to find higher minimum deposit and balance requirements when compared to the first two accounts we covered. 

Often referred to as CDs, these aren’t just a passé way of consuming music; they are a great way to give your money a boost! Think of a certificate as a reverse loan in which you agree to give your financial institution money for a set period of time (could be as little as three months or as long as five years) and in turn you receive interest. The longer you keep your money in the account, the higher your return.  

This is a great account, as long as you’re comfortable with locking up your money for an extended amount of time. If you need to withdraw your money before your term is up, then there’s a chance that you will have to forfeit some of the interest you earned. 

You’ve heard it a million times. “It’s never too early to start saving for retirement.” The reason you’ve heard it repeatedly is because it’s absolutely true. An IRA can come in many forms, but the two you’re going to hear about the most are Roth and Traditional. The biggest difference between the two is how and when you receive a tax break. 

The contributions to a traditional IRA are tax-deductible, but withdrawals in retirement are taxable. Contributions to Roth IRAs aren’t tax deductible, but your withdrawals in retirement will be tax-free. Want more detailed information on IRAs? Read our other blog post.

Now that you know what the different deposit accounts are, which ones are right for you? Still not sure? Contact us so we can help you with your options.