Key Takeaways
- Traditional savings accounts are great for jump-starting your savings plans or building your emergency fund.
- If you already have a large amount of money to move over, like for a down payment on a house, that would be a good opportunity to open a money market account.
- With share certificates you have a much higher minimum deposit requirement, and you won’t have the quick access to your funds that you would have with a regular savings or money market account.
- If you’re just starting out with building your savings account and want to grow your money fast, a high-yield savings account is a better starting option than a money market account.
You work hard for your money, but are you putting your money to work for you? Whether you’re building your emergency fund, saving for a big purchase, or getting money together to invest, using the right type of insured savings account can help grow your hard-earned money.
Here we’ll show you what to look for in a savings account as well as the differences between a regular savings account, money market accounts and share certificates.
Why You Need a Savings Account
Opening a savings account will help you put money away toward financial goals. Unlike checking accounts, savings accounts typically offer higher interest rates so you can grow your savings over time.
A savings account serves as a secure repository for your money, allowing you to earn interest on your balance while keeping it easily accessible. Whether it's for short-term goals or long-term financial stability, a savings account provides a safe and liquid space for your funds. A savings account is also a great place for your emergency fund, about $1,000 to $2,000 that is meant only for covering unexpected expenses.
What is the Benefit of Saving with a Credit Union vs. a Bank?
Depositing your money with a credit union is similar to depositing with a bank with one big exception – credit unions typically offer better interest rates than banks. Since credit unions are owned by their members and banks must create a profit for their investors, credit unions can pass those savings back to their members in the form of lower fees and better rates. You’ll earn more for your money going the credit union route.
Much like with a bank, your savings with a credit union are protected. Credit unions are insured by the National Credit Union Administration (NCUA) for up to $250,000 per depositor.
4 Types of Savings Accounts: Which Savings Account Will Earn You the Most Money?
1 Traditional Savings / “Share” Savings
A basic savings account allows you to deposit and withdraw money at any time. You earn interest on a traditional savings account (commonly called Share Savings accounts with credit unions) only if you keep at least the minimum required amount in the account. If your balance is lower, some banks don’t pay interest and others may charge a fee for holding your money.
Keeping your money in a traditional savings account ensures you’ll earn more than if your money was in a checking account or no account at all, but interest rates on a regular savings account are likely to be the lowest the bank offers.
Pro Tip: Traditional savings accounts are great for jump-starting your savings plans or building your emergency fund.
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2 High-Yield Savings Accounts
How do high-yield savings accounts work? A high-yield savings account is designed to do exactly what its name suggests—generate higher interest rates compared to traditional savings accounts.
One of the biggest reasons you might choose a high-yield savings account is for its competitive annual percentage yield (APY). This means that your money can grow at a faster pace compared to a regular savings account. Plus, the interest earned in a high-yield savings account is often compounded daily or monthly, helping to boost your savings even more.
3 Money Market Accounts
A money market account (MMA) is a savings account that typically pays higher interest rates than regular savings accounts. MMAs usually offer tiered rates, meaning you can earn an even higher rate on large balances or on part of your balance over a certain level.
You’ll likely see a higher minimum required deposit than with a regular savings account. So, if you already have a large amount of money to move over, like for a down payment on a house, that would be a good opportunity to open a money market account. If your account falls below the minimum requirement, you might see some substantial service fees, forfeit your interest, or both.
4 Share Certificates
A share certificate – similar to a certificate of deposit (CD) at a traditional bank - are high-end savings accounts. These will generally pay higher interest rates but come with different regulations. You’ll have a much higher minimum deposit requirement, and you won’t have the quick access to your funds that you would have with a regular savings or money market account.
When you open a share certificate you agree to commit your money for a specific term or period of time. If you withdraw money from the share certificate before it matures when the term ends, you’ll lose some or all the interest you would’ve earned.
Terms can range from three months to five years. The longer the term, the slightly higher the interest rate you may earn. When the share deposit matures, you can roll over the money into another share certificate, transfer your money to a different account or have the credit union send you a check.
High-Yield Savings vs Money Market Accounts
Another savings option is a high-yield savings account, but what’s the difference between high-yield savings vs money market accounts? Both offer attractive features, so let's understand the nuances between them.
High-yield savings accounts come with a competitive annual percentage yield (APY). This means that your money can grow at a faster pace compared to the traditional savings account we talked about earlier. Plus, the interest earned in a high-yield savings account is often compounded daily or monthly, providing a compounded boost to your savings.
Note that high-yield savings accounts are not immune to market fluctuations, and their interest rates can vary over time.
Money market accounts typically provide higher interest rates compared to standard savings accounts, but they may fall slightly short of the rates offered by some high-yield savings accounts. You’ll still see a higher minimum required deposit than with a high-yield savings account.
So how do you choose between high-yield savings vs money market accounts? Think of it this way: A money market account may be a great option if you already have a large savings established and you want to grow a bigger return for those earnings. But if you’re just starting out with building your savings account and want to grow your money fast, a high-yield savings account is a better starting option.
Save for what’s next.
Earn higher dividends on lower balances with OneAZ’s high-yield savings account.
How to Open a Savings Account at OneAZ Credit Union
You can open a savings account online, over the phone, or in person at a branch. You will need your Social Security number and a form of identification, like a driver’s license or passport. You will also need to make an initial minimum deposit.
Savings Calculator
Savings Account FAQs
The savings account that will earn you the most money depends on factors like interest rates, fees, and your financial goals. High-yield savings accounts and share certificates often offer the most competitive rates.
Basic savings accounts may offer lower interest rates compared to high-yield savings accounts or money market accounts. Always compare rates and terms when choosing a savings account.
Interest is essentially the cost of using money. In a savings account, you are paid interest by your financial institution for keeping money in the account. The interest rate is a percentage of the account balance, and it is typically compounded either daily, monthly, or annually.
No, opening a savings account does not impact your credit score. Unlike credit cards or loans, savings accounts are not a form of credit, so they do not appear on your credit report.
Keeping your money in a savings account helps your funds grow over time. Maximize your savings by opening a regular savings account with a low minimum deposit, a money market account with higher interest, or a share certificate that locks your funds for a specific time but yields the highest return – whichever fits your needs.
Ready to watch your money grow? Open a OneAZ savings account today!
APR = Annual Percentage Rate
