differences of saving accounts - regular, money market account, certifucare of deposit?

Question

advantages and disadvatages

Answer 1

A regular savings account has the advantage of being very liquid with low minimum balance requirements. However, interest rates on savings accounts amount to almost nothing. If you have more than a couple thousand, you should look for something else.

Money Market accounts are still very liquid and they have better interest rates than savings accounts, but still rather low - probably less than 4-5%. Money Market accounts also have higher minimum balance requirements (probably at least $2,500) and they also have limits on the number of withdrawals in a time period. These are probably a good place to park $10k - $20k but more than that and you should be looking for something better.

Certificates of Deposit or CDs are still a liquid account, but if you withdrawal money before the term of the account you will incur penalties. CD rates are usually better than Money Market accounts, but still not likely to be over 7-8% unless you have a big balance with a very long term. A good investment strategy for CDs is to take the money you plan to invest and divide it up 5 ways and open 5 CDs with terms of 1,2,3,4, and 5 years. Each year when the term is up on one you roll it over to a 5 year CD and soon you will have 5 CDs earning the better 5 year rates but you will have one coming up every year in case you need the money.

All of the accounts mentioned above are insured up to $100,000 by the FDIC if the accounts are with banks. If you have more than that you should split it between several banks. But in reality, you probably want to keep your bank deposits below $50,000. If you have more than that to invest you should look at something a little less secure but with higher rates like treasury bills, annuities, or mutual funds.

Answer 2

okay, to start with the CD-you have to leave the money in for a specified period of time without touching the principle, but in return you get a higher interest rate.

Money Market-usually has higher fees, requires a higher minimum balance, but has a higher interest rate than a regular savings account.

Regular Savings account-all banks are different, but usually give the lowest rate of return of the three, require the least amount of money to avoid low balance fees, etc.

Which is best depends on your situation. If you have enough money and don't need it for a long period but are looking for a safe, FDIC insured investment, CDs are good. If you might need the money, but won't go below are certain large minimum, Money Market is good. If your account revolves a lot, regular savings is the way to go.

Answer 3

Savings Account- loan money to the bank for at a very low interest rate. You can withdraw the money at any time.

CD- loan money to a bank for a better rate, but you can not access the money until the term expires. The longer the term, the better the rate.

Money Market- is a mutual fund that loans the money to the U.S. Government. The interest rate is better than a savings account. You can withdraw at any time. Most require a minimum investment up front, usually $500-2000.


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Answer 4

commence with a mark downs account. you do not favor a lot money to open one. maximum money marketplace expenses require $2,500 as an starting off deposit. The costs of interest on mark downs expenses and money marketplace expenses are both very, very low--neither is particularly extra appropriate than the different. There must be free of charge to open both account, notwithstanding the minimum deposit required for a money marketplace account will be a difficulty in the event you're first starting off to save. from time to time, on-line banks grant particularly larger costs of interest, yet you do not have the convenience of going to a branch and coping with someone. make positive any monetary agency or credit union the position you open an account is federally insured (virtually all of them are).

Answer 5

Savings accounts you can open with $100, and with very low interest, usually around .50% APY
Money Markets require a bigger minimum deposit usually around $1000,00, and still pay a low 1.0% APY, but, can double as a checking account also with limited check writing.
A CD is a Certificate of Depost. Usually with minimum deposit of $5000. Your money would be tied up for a minimum of 3 months. APY is usually around 5.0% APY over hear. Caution, there is a penalty for early withdrawel.