Savings accounts are best when you want to keep your money close at hand but still earn interest.
It can be hard to know when to save and when to invest. Having a plan will help you set goals and keep track of how much money you should be putting aside.
A savings account is best used when you want to keep your money close at hand but also want it to earn interest for you.
While some checking accounts pay interest on your deposits, savings accounts typically pay more, with higher interest rates.
Like checking accounts, most savings accounts allow you to withdraw funds without penalties, although conditions can vary. Some banks limit your withdrawals within each month.
With fast, easy access, they’re good for emergency funds – an account where you can tuck away money for when you need it most.
Savings accounts are also ideal for short-term goals, like saving for a car or a big vacation. It’s a place to save in targeted ways so you can reach the goals that are important to you.
Most savings accounts are also FDIC-insured up to $250,000. So it’s a safe place to store your money.
A savings account is an excellent way to grow money without the risk of investing in stocks or mutual funds. It can also be used to build an emergency fund and save for unexpected expenses.
There are many ways to save money with low risk involved, and it's important to find the best place to save.
1. Traditional savings account. Traditional savings accounts are often offered alongside checking accounts, to simplify transfers between accounts. Interest rates can vary depending on the account and bank.
2. High yield savings account. High yield savings accounts usually offer the same easy access as a regular savings account but with a higher APY.
3. Money market accounts. These are two kinds, money market savings accounts and a money market mutual fund. Both invest your money in short-term, fixed income investments and typically offer higher rates of return over a standard savings account’s APY. However, the mutual fund version is not FDIC-insured and often doesn’t come with a debit card or checking writing.
4. Certificates of deposit. A CD holds your deposit for a specified period of time. In exchange for agreeing to keep your deposit in your CD, you’ll typically earn more than the interest on a traditional savings account. The term on a CD can range from one month to ten years.
Achieve financial stability with Bright.
Investing is best used for long-term planning, when looking forward to major life events, like home buying or retirement.
It’s never too early to start investing, and over the long term, a balanced, diversified portfolio of investments can provide larger returns than most savings accounts.
Diversification is a strategy used in portfolio investing, spreading your funds over different kinds of investments to take advantage of different levels of risk. It can help ensure steady long-term growth and reliable performance.
Investments can also provide income from dividends. Some stocks provide regular income to investors through a dividend. They can be a source of cash or pay for more investing to grow your portfolio.
Bright can build your savings faster than most people can on their own. Week by week, Bright moves funds from your checking account to your Bright savings account -- so you’re saving more regularly and reaching your goals faster.
You can also set up saving pockets for personal goals -- like a wedding, a vacation or a new car -- to help focus your savings.
Download the Bright app from the App Store or Google Play. Connect your bank and your cards, set a few goals and let Bright get to work!
With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.