Different Types of Savings Accounts

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Types of savings accounts include conventional savings account that pay a fixed rate of interest and savings accounts that tie up money in CDs for higher interest rates. Prepare to leave money in a CD savings account for a set period of time in order to get the full benefit with advice from a financial adviser in this free video on savings accounts.

Part of the Video Series: Credit Cards & Personal Loans
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Video Transcript

Hi, my name is Matt McKillen. I'm with Innovative Financial Group. I had a question posed to me that, "What are the different types of savings accounts or, or savings options with the bank or the credit union?" The most traditional savings account is where you put your money in as you please, the bank agrees to pay a certain amount of interest; whether it be three percent or four percent, two percent and is calculated on an annual basis based on your balance. That's a typical savings account. Now sometimes the bank will offer a higher rate of interest on an account if you lock your money up. The typical example of that type of savings account would be CD or Certificate of Deposit. Some people can do a twelve-month CD, a twenty-four month, a thirty-six month; usually the higher the term or the length of the CD, the higher the rate of interest the bank will pay. But you have to understand that if you go into a thirty-six month CD, because maybe it pays five or six percent, that you can't touch the money. I mean officially you can, you can always liquidate the CD, but if you do, you will be penalized for that. So the longer time you're willing to tie up your funds into a CD account, the higher return of interest. In regards to the typical savings account, there's usually no restrictions whatsoever; you can move money back and forth into your regular savings account and then they just pay you interest, I think probably based on your ending monthly balance. Again, my name is Matthew McKillen and I'm with Innovative Financial Group.

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