A cash savings account is a place that you can park your cash and gain interest on it. Effective short term savings accounts are ones that permit you to meet your needs in four important areas. The access to the funds is critical.
Cash savings accounts should allow you to withdraw funds from the account whenever you need. This should be accomplished through convenient methods like ATM cards or online means. Funds in all types of cash savings accounts are insured by the FDIC, or Federal Deposit Insurance Corporation, to $100,000 for all people and $250,000 for retiree accounts.
Interest is another area of concern for cash savings accounts. This pertains to the rate that the bank or institution will give you for holding your money. Larger amounts generally attract superior rates.
Penalties should not have to be endured for withdrawing cash from cash savings accounts either. Certificates of Deposits and other instruments feature such penalties, but cash savings accounts should not. These terms of withdrawal should be clearly specified in any cash savings account.
Finally, service is an issue to be considered with cash savings accounts. You might wish to have customer service in a bank branch included. Otherwise, do it yourself online accounts can be established.
There are several types of cash savings accounts from which you can choose. One is a checking account that includes interest. This might be called a money market account. Such money market accounts include check writing privileges and check based access to funds. These can be held at banks or brokerage houses, which are gaining in popularity at banks’ expense. Some privileges besides check writing include higher money market rates of interest and ATM card and machine access to funds. Downsides to these types of accounts include sometimes high minimum balances and possible fees.
Standard savings accounts are another option with cash savings accounts. These were once called passbook accounts. The interest rates provided by these accounts are lower than inflation, which proves to be their major downside. Their major advantage lies in the extremely low account minimums and fees charged to have them.
High yield bank accounts are a third type of cash savings accounts. Providing versatility of adding or withdrawing funds without penalties, they also offer the liquidity of not tying up your money for long periods of time. Nowadays, there are high yield bank accounts that provide interest rates that prove to be comparable to Certificates of Deposits, without showcasing these investments’ restrictions on taking out money. The highest rates available on high yield bank accounts come from banks that are online only versions of the traditional lending institutions.
They accomplish this by not offering branches and in person customer service benefits. This means that unless such an online high yield account includes an ATM card, the only way to withdraw the funds is through electronic transfers to other brokerage, savings, or checking accounts, which can result in delays of as much as two to five full days. Without such an ATM card, it can be inconvenient to access cash stored in these accounts in a hurry or emergency situation. High yield accounts sometimes offer shorter term teaser interest rates, so individuals should investigate the product’s prior six month history of interest rates to learn what their consistent rates turn out to be.