Making Sense of Savings Accounts

7/15/2019

Making Sense of Savings Accounts

Trying to make sense of savings options can be confusing, but once you know what your goals and options are, then the decision of where to put your money will be easier. At FreeStar Financial, there are four basic savings options to choose from: savings accounts, rewards checking accounts, money management account, and certificates of deposit (CDs).

1. Savings Account

A savings account is a deposit account that earns interest and allows you to safely save your money. A savings account comes with a debit card which offers unlimited withdrawals using an ATM or electronic transactions through online banking.

2. Rewards Checking Account

At FreeStar Financial we offer Boomerang Rewards Checking which acts as a savings account, earning 4% (APY)* interest on monthly balances up to $7,500 with no minimum balance required or monthly fees. Other advantages of our rewards checking are unlimited withdrawals, access to over 1,700 ATMs in Michigan, and compatibility with electronic transfers.

3. Money Management Account

A money management account is similar to a savings account and typically earns a tiered interest rate based on the amount, which is higher than a standard savings account. Money management accounts are liquid but are limited to six withdrawals per month, and there may be a minimum balance required to open the account and may be subject to other fees.

4. Certificates of Deposit (CDs)

CDs are like savings accounts except they require a minimum amount to open and the deposit is locked in for a certain period. CD periods can range from as little as 3-months to 5-years or more. The best advantage of using a CD for your deposit is that they usually earn a high-interest rate compared to a regular savings account or money management account and that interest rate doesn’t change during the term. Please be aware that if there is a withdrawal before the maturity date, a penalty may be assessed. Once the CD matures, you will have the option to withdraw the money, or roll it over into another CD.

So which account is best for you?

A savings account will make the most sense for those who have a relatively small balance, need access to their money when they want, don’t need a checking account or debit card and want to avoid paying fees.

A Boomerang Rewards Checking account is an excellent way for people to earn money just for using their debit card. Earning 4% every month by using a debit card at least 15 times per month, maintaining a balance in the checking account of $3,000 - $7,500, and using online banking.

A money management account is for people who have more significant funds, want to earn a higher interest rate, and don’t need to make many withdrawals — usually the higher the balance, the better interest earned.

Finally, certificates of deposit are great for those who want to earn a high-interest rate, know how long they will need to save their money and are willing to trade easy access to their money for the increased interest.

Savings Comparison Chart

  Savings Account Rewards Checking Account Money Management Account Certificate of Deposit
         
Interest Rates GOOD BETTER BETTER BEST
Unlimited Access to Funds YES YES Limited NO
Minimum Balance Required NO NO YES YES
Fees LOW or NO LOW or NO YES YES


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