I'm saving for a house,and I have $3000. What kind of bank account should I put the money in?

Answer 1

It all depends on how long you plan to hold the account. 6 Months, 1 year or more than 2 years? Once you have determined the amount of time you want to put your money away for here are my recommendations.
About a CD, CD's are very illiquid, which means you cannot convert to cash very easily without penalty. Only put your money in a CD, if your abosolutely positive it will stay in the account for that amount of time. The CD may return around 3-4% for a 6 month CD, at the highest.

I would recommend looking at the money market accounts, these accounts are more likely to return around 5%, and you can easily pull out your money whenever you need to.

Also, If you think you will keep the account for more than a year, Look also into a no-load mutual fund, see if your bank can offer these mutual funds. A no-load mutual fund does not charge a commission for adding money to the account but you have to keep the money in the account for one year, if you withdraw within the year, you will incur a penalty. I actually have a no-load mutual fund, usually referred to as Class C shares. Your return would likely be around 10%, but mine returned about 20% this year with the strong market.

With your investable cash, I would say The easiest account would be the money market account through the bank. The no-load mutual fund would take more time to set up. Make sure to consult a qualified individual before making any decisions.

Answer 2

I've always hung towards CD's. Once it's in it can't be touched without you being penalized. That's kind of punishment that you can chose for yourself. The interest is usually the same as a Money Market. But money market you can withdraw on. If a bank sees that you have it set up so that you can't withdraw on it without penalty then I would think that is more evidence that you do in fact want to use that money for one purpose only and not to touch it. And even if you break the CD when the time is right, you dont really lose anything. Just that quarter's interest. That's not really a biggie cause if you think about it, that money wasn't really yours. It's just interest for a quarter. It's well worth the sacrifice. Chek out how long and for what % you get for each year. Explain it to a bank rep. I've done Money Market with my parents money and I've done CD's. Like I said. The only difference was that CD's sit there and you can't touch them. You can add to them but not break them. Money markets allow you to draw from them. You may also want to get more than 1 of an account like these. Say you take the 3000 and you put $2000 into a CD at 10%. Then you take the $1000 and put that into a CD at 10%. You find that you have to break a CD. Well. No matter which one you have to touch, one of them is still at 10%. So say you used only 500 out of the 1000 one. You reinvest it but the rate dropped to 5%. You still have a total of 15% between both accounts. Had you broken a $3000 CD at 10%, you would now be at a rate of 5% cause the interest went back down. SEE? Also check into this. It used to be you could "jump" a CD. That means that if the % rate goes up then you can jump the rate up without cancelling the CD or doing massive paper work. Don't know if they still do this or not. You have to ask. But it isn't worth it unless it has gone up 2points. Hope I didn't confuse you. If I did then print this and take it to a banker. They will understand it. Good luck with house.

Answer 3

Use an online savings account.
Why?
1)Same or better returns than a CD - I get almost 5%. You won't find that at your local bank.
2)Much better liquidity than a CD - if the house you want pops up all of the sudden or you need the money for emergency, a CD won't help you much. But you can withdraw or transfer money from an online account in a short time.
3) Low or no fees (almost forgot this one)

Where?
http://www.hsbcdirect.com/1/2/1/offer?code=husa

if you decide to go with CDs I still would not use a local bank. HSBC has a 5.25% APY 6 month CD. that's not bad.

WHATEVER YOU DO, DON'T JUST GO TO THE LOCAL BANK. THEY'RE A RIPPOFF 99% of the time (Trust me I worked for 2 major banks for 6 yrs).

Answer 4

Make your money work for you. You don't say how long you plan to save before you start your search for a home but a short term CD, 6 months or a year depending on your time frame, will yield a higher rate of interest than a savings account or an interest bearing checking account. Discuss your plans with your banker, they will be able to best advise you on your options.

Remember to retain all of your deposit receipts and, when you cash out the CD, keep a copy of the paperwork including the deposit receipt into whichever account you decide to deposit. Your mortgage lender may need the paper trail.

Answer 5

A Money Market Savings Acct would yield the highest return, and still make the lender happy about it not being in a checking acct.

Answer 6

I would put it in a separate savings account...It will be away from your house hold money and also it will draw a little interest while it is sitting there...

Answer 7

put it in your savings account. when you apply for a loan they will ask to see your assets. if you put it in your checking a lot of the deposits wont be counted as assets. so put it in your savings