Saving money on a regular basis is essential. Having money saved prepares you for financial emergencies, losing your job, a medical expense or major car repairs. It’s also imperative to save for retirement, even if it feels far away. You may also want to save for other short- and long-term goals, including launching a business, buying a home or car, a child’s education, a specific event (such as a wedding), a large purchase or an upcoming trip.
Choosing the right savings account is key because not all savings accounts are the same. Here’s a closer look at 10 savings account options to help you determine which one might be the best fit for you.
1. Regular savings account
How it works: The most common savings account is a traditional savings account at a bank or credit union. If the bank is a member of the Federal Deposit Insurance Corp. (FDIC) or the credit union is a member of the National Credit Union Administration (NCUA), your savings is insured up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
Rates: When you are choosing your savings account, you want to note the annual percentage yield (APY). This is what impacts how much you will earn on interest. Shop around for the best available rates, while also keeping other important factors in mind, such as any account fees, ease of access to funds, FDIC insurance and more.
Interest rates on basic savings accounts are generally low compared with other savings products. The national average savings account yield is 0.54 percent APY, according to Bankrate’s survey of institutions as of the week of Jan. 23, 2025.
Fees/Accessibility: Basic savings accounts typically offer easy access to cash. You may be limited to six withdrawals per statement cycle, not including ATM withdrawals and taking out cash inside a branch. But check the bank’s policy.
Some banks charge monthly maintenance fees for savings accounts, while others don’t. There may be a minimum balance required to avoid a fee as well. Other possible fees with any savings account include charges for excessive transactions, account closure, receiving paper statements, dormancy fees and more. Check your bank’s fee schedule for details.
2. Online savings account
How it works: A brick-and-mortar financial institution isn’t the only place to shop for a savings account. Online banks provide an easy, accessible way to manage your money from anywhere in the world on your smartphone or computer.
Moreover, online savings accounts are considered safe at federally-insured banks and credit unions – as long as you stay within the limits and guidelines of the Federal Deposit Insurance Corp. (FDIC) for banks or the National Credit Union Administration (NCUA) for credit unions. What’s more, online savings accounts tend to offer higher yields than those at financial institutions with brick-and-mortar branches.
Rates: Online savings accounts tend to offer higher yields than those at financial institutions with brick-and-mortar branches.
Fees/Accessibility: Most online savings accounts do not have monthly maintenance fees, though check your account’s fee schedule to make sure. Like traditional banks, online banks may restrict withdrawals to six per statement cycle, so learn the terms of your account to avoid possible penalties. And of course, unlike a brick-and motor bank, you will not be able to visit a branch to access your funds.
3. High-yield savings account
How it works: High-yield savings accounts are similar to traditional savings accounts with one big difference: The interest rates are higher, allowing you to grow your savings faster without compromising safety and liquidity. At a member-FDIC bank, your money is safe, even if your bank fails, as long as you’re within FDIC limits and guidelines.
Rates: High-yield savings accounts offer much better rates than traditional ones. As of 2025, the highest interest rates on savings accounts are hovering around 4.5% to 4.75%, whereas many traditional savings accounts only offer 0.01%.
Fees/Accessibility: Many high-yield savings accounts do not have monthly fees, but some do. You might still be limited to six withdrawals or electronic transfers per statement cycle, but check with the bank. Some banks have loosened those rules.
4. Student savings account
How it works: Another savings account option is one specifically for students. Student savings accounts tend to have features that make banking easier for young people with modest financial means. You can find accounts with no minimum opening deposits and no monthly service fees.
The downside is that options are somewhat limited. Many banks and credit unions offer student checking accounts, but student savings accounts are less common.
Rates: If you’re having a hard time finding a savings account specifically for students, don’t get discouraged. Student savings accounts might not offer competitive yields, but you can opt for an online or high-interest savings account that doesn’t have a minimum deposit requirement.
Fees/Accessibility: You can find accounts with no minimum opening deposits and no monthly service fees. Check to see if there are maximum withdrawal limits.
5. CDs
How it works: A certificate of deposit, or CD, is another type of savings account. CDs typically pay a higher yield than traditional savings accounts because you agree to let the bank keep your money locked up for a specific term that could range from three months to five years or longer. The downside is reduced liquidity, or the ability to withdraw funds when you want them without a penalty.
Rates: As you compare CDs, you’ll can still find a five-year CD with APYs above 4 percent. However, the trade-off is you agree to leave your money untouched for five years. Your funds will be safe if they’re FDIC- insured, but should you need to withdraw your money before the CD has matured, you’ll incur an early withdrawal penalty.
Fees/Accessibility: Because it ties up your money for a specific length of time, a CD is a good place to save for longer-term goals. It’s not the best place, however, to stash your emergency funds or cash you might need to access in the short term. Should you need to withdraw your money before the CD has matured, you’ll incur an early withdrawal penalty, which is usually a few months’ worth of interest.
6. Money market accounts
How it works: Money market accounts offer a safe place to store your savings and take advantage of decent yields. This account is similar to a high-yield savings account, though it often offers check-writing capabilities or a debit card for easy access to funds. Market money accounts tend to require higher minimum balances than other types of savings accounts, so consider the pros and cons of money market accounts before making a decision.
Rates: Many of the top money market accounts are offering APYs of 4 percent or higher. Money market accounts typically pay less than CDs.
Fees/Accessibility: Like most bank savings products, your money market account is insured by the FDIC for up to $250,000, per depositor, per insured bank, for each account ownership category (if your institution is insured). Unlike most savings accounts, money market accounts often offer access to your funds via a debit card or paper check.
Although some banks may impose limits on monthly withdrawals, money market accounts offer greater flexibility than traditional savings accounts and CDs. Whether the money market account has a monthly maintenance fee depends on the issuing bank.
7. Savings accounts with automatic savings features
How it Works: Savers who want extra help reaching their goals might consider opting into automatic savings features. You usually need to link a checking account with a savings account for these functions to work. Some work by rounding up debit card transactions to the nearest dollar, then transferring the difference into your savings account.
Another option is to set up an automatic deduction from your paycheck and have the money moved into a savings account. Although these steps may seem small, they can help you build up your savings account if you’re disciplined and stick to it.
Rates: Interest rates will likely track with the type of savings account that hosts the automatic savings features (i.e., if it’s a high-yielding online account, it will probably have a higher APY than if it’s a traditional bank account.)
Fees/Accessibility: The hosting bank, credit union, or online financial institution will determine whether the account has maintenance fees or withdrawal limits. Check the fee schedule for the bank’s requirements.
8. Cash management account
How it Works: Cash management accounts (CMA) are a little different from other savings vehicles. They are not available at banks and credit unions but are offered by non-bank financial institutions such as brokerages and robo-advisor platforms. They combine many features of checking, savings, and brokerage accounts.
Many CMAs place your funds with partner banks, which is good for big depositors. By spreading your money around, your FDIC coverage can be expanded beyond the $250,000 limit.
Rates: CMAs do pay interest, but rates typically are lower than APYs on high-yield savings accounts.
Fees/Accessibility: Because this type of account is designed for everyday transactions (paying bills, writing checks, etc.), a cash management account is unlikely to have withdrawal limits. Most CMAs do not charge monthly maintenance fees.
9. Health Savings Account
How it Works: A health savings account (HSA) is designed for a singular purpose: to pay medical expenses. You must be enrolled in a high-deductible health plan (HDHP) to open an HSA, and you and/or your employer can contribute to the account. A major benefit to this type of account is that deposits are tax deductible, and growth is tax exempt.
There are contribution limits to this tax-advantaged account. Individuals can contribute up to $4,300 for an individual and $8,550 for a family in 2025. Savers who are age 55 and over can contribute an additional $1,000.
HSAs aren’t subject to federal income tax and unspent account funds roll over year after year for future health care expenses. Since an HSA can only be used to pay for health care and you must have an HDHP to qualify, it is not a good savings account for everyone. Be advised that not all HSA accounts are FDIC insured.
Rates: The APY on HSAs is usually lower than high-yield savings accounts. One unique feature of HSAs is that you can also invest your funds in stocks, bonds, ETFs and other securities if your account allows it. If you elect to invest your money, the returns would follow that of your chosen investments. Note that unlike other savings accounts on this list, once you are investing your funds, there is more risk and the money is no longer protected by federal deposit insurance.
Fees/Accessibility: You can withdraw funds from your HSA at any time to pay for qualified medical expenses. If you withdraw funds for other purposes, that money is subject to a 20% penalty. (This rule does not apply if you are disabled or over age 65.)
10. IRA and Roth IRA
How it Works: There are some savings vehicles that are better for long-term goals like retirement.
Individual retirement accounts, including Roth IRAs and traditional IRAs, are tax-advantaged options for saving for retirement. You can contribute up to $7,000 to these accounts in 2025, or $8,000 if you are age 50 or older.
The difference between a Roth IRA and a traditional IRA is in the taxation. A Roth IRA allows you to contribute after-tax dollars, and funds can be withdrawn tax free after you turn 59½ years old. A traditional IRA allows you to contribute pre-tax dollars, which are taxed as income when you withdraw them after you turn 59½.
Rates: You can invest IRA funds into stocks, bonds, IRA CDs and other securities, so the return rate depends on the investment mix you choose. Note that unlike other savings accounts on this list, once you are investing your funds, there is more risk and the money is no longer protected by federal deposit insurance.
Fees/Accessibility: The institution that holds your IRA (called the custodian) may charge an administrative or custodial fee for keeping track of your account. You may also be charged transaction fees for buying and selling securities, and mutual funds may also have management fees.
Plan to keep all contributions to your IRA or Roth in the account until you retire or you turn 59½. If you withdraw funds from your traditional IRA early, they are subject to both income tax and a 10% penalty. However, you can withdraw your contributions from a Roth IRA at any time, but not the earnings.
Bottom line
The type of savings account you choose should help you achieve your savings goals. As you explore your savings options, think about your needs. Do you value security and liquidity? Or do you want the highest return, even if you have to sacrifice liquidity? Or are you looking to use your contributions to optimize your taxes?
Be honest with yourself about the amount you can afford to put in savings. Start by building an emergency fund that you can access easily. Then, work toward other savings goals with the account that best suits your needs.
Read the full article here
