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Savings Accounts, CD and Money Market Accounts

In a nation of spenders, there aren’t a lot of people with a significant amount of savings. The recession of 2008 did a great job of exposing how important it is for each and every one of us to have a significant amount of savings stashed away. Caught in a never-ending loop of charging to our countless number of credit cards, when the bottom fell out of the stock market, it became painfully obvious that the average family, living paycheck to paycheck was ill equipped to handle a major downturn in the economy. Perhaps it was due to all of the previous years of living high on the hog and living well above our means, but a combination of a terrible economy and a steep downturn in the number of jobs brought about fear, confusion and despair.

It is the realization of all that has occurred…well after the fact that a majority of Americans have realized the importance of opening a savings account and saving for the future. The rule of thumb has always been to have six months to one year in savings for emergencies. The majority of us were not alive during the first major depression, so the feeling of believing that the good times would never end is somewhat understandable. Through in the inflated housing market that was created by low interest rates and false belief that the housing market bubble would never burst, and you have a large percent of the population jumping in to home ownership as a form of investment, rather than better accounting and housing keeping practices of our household income.

The fallout of all that has happened not only in the stock market, but in the job market and the housing markets has left many hardworking Americans wondering what to do with their lives. The worst off from this crisis has been those who had no savings accounts and for status, ego, or simply poor financial planning…chose to live well above their means. Granted many people, both rich and poor lost a lot of their retirement savings from the stock market downturn and their investment accounts, there was also a great many who simply did not have a penny saved. Possibly it was the syndrome of keeping up with the Jones. Now take that living above our means and add in the dramatically changing employment landscape and you have a disaster of biblical proportions.

There are so many people who are suffering financially and wondering where they are going to get their next paycheck that despair is running rampant in our society. There are millions of people looking for work and unable to find it. As a result, their ability to save is non-existent at the moment. There were a small percentage of people that were prepared for this emergency that is being experienced by the entire country. Those people invested in the stock markets as well, but they were conservative with their investments. They did not try to get rich quickly in penny stocks and invested in stocks that paid dividends and maintained solid performances. Even investing in these types of stocks did not prevent a lot of people from losing much of their savings and retirement funds, but it reduced their exposure to the carnage.

Search for Free Savings Accounts

Even so, no one could foresee the demise of Bear Sterns and Lehman Brothers. No one could foretell the dangers of a bank as strong as Bank of America, being financially strained by their acquisition of Countrywide and Merrill-Lynch. So, even those people who made investments is such corporations that they thought were strong, became victims as well. Through in the matter of inflation and the little that some had in their savings accounts, CD accounts and money market accounts are only worth a fraction of what they used to worth.

Becoming a society of savers and managing our spending and charges to our credit cards are the only ways that we as a society than come through these tragic economic circumstances stronger and better prepared for the future. Rethinking how we handle our money and prioritizing our savings are the only ways that we can help to prepare our children for the future. It is said that history if left unchecked, will eventually repeat itself. We all have learned a lot from this major recession… some might even call it a miniature depression. The number one most important thing that everyone has learned regardless of their social class is the importance of having a well-maintained savings account.

With so much emphasis on opening a checking account, the majority of people have not put much thought into the benefits of savings. Even if you don’t make a lot of money, you can still open a savings account and start saving for tomorrow. Not only is this a good idea, but it will help set an example for your children that they will benefit from for the rest of their lives. Take all of the various shows on television or even advertisements and the message is spend to spend and keep spending more. Then you are supposed to charge and continue charging until your credit cards are all maxed out. After that you are supposed to sign up for credit counseling to help manage all of the debt that you have built up. Then the next step is to complain to your politicians about overspending. This is not the American Dream.

We should buy what we can afford and use our credit cards only for emergency purposes. We should try to save at least ten to twenty percent of our earnings and live within our means. Somewhere along the line these messages was lost to the buy everything in sight and charge it all on the plastic. The concept of a savings account became as distant as a foreign language. Now, everyone is touting benefits of saving…not spending. It appears that only in the worst of times do we come to our senses.

So, how do we save and what are some the means that we can save our money? The most simplistic and basic ways of saving and growing our money are with a bank and credit union savings accounts. There are a host of other products within banks and credit unions that can help us build a strong savings account. You can open a free savings account with your bank of choice and start making regular deposits into that account. You can open an online savings account, which tend to pay higher interest rates. You can open up a CD account and invest your money that way. There is also the matter of a money market account, which is also known to pay higher interest on your money. The typical money market and CD accounts will generally give you a better return on your savings.

When you are searching for a free savings account, what is the most important thing to you? Are you looking for a large bank or credit union or do you prefer the cozy feel of a local community banking institution? Are you interested in a bank with a large network of ATMs nationally and possibly internationally? Do you want a bank or credit union with free online banking features? Does mobile banking or lack thereof play a part in your decision to open an account with the institution?

Key things to look for when searching for free savings accounts:

1. Minimum opening deposit amount?   
2. Minimum monthly balance requirement?  
3. How interest rates are compounded? (i.e. daily compounding or annual compounding)  
4. Actual interest rates paid by on your deposits?  
5. The circumstances that the bank or credit union will charge you fees on your account?  
6. Types of fees that can be incurred? (i.e. teller fees, ATM fees, lobby fees, drive through fees, etc.)  
7. Whether or not there is a free debit card or check card with your account?  
8. How many free checks you are allowed?  
9. Whether your savings account comes with free statements?  
10. Whether or not you are restricted to a maximum number of transactions per month? 

There are other factors, but these would typically rank as the top key things when searching for free savings accounts. 

There are many aspects that go into choosing a savings account. Not everyone is going to have the same reasons for opening their bank account, so it is important to do your homework and choose the best place to build your savings. Although the reasons are vast for why a person will choose one bank or credit union over another, there are several factors that everyone should keep in mind when searching for a bank or credit union to open a savings account. Ask yourself the following question, “What is my reason for opening a savings account?” There should only be one answer and that is to build a nest egg.

Savings accounts whether they are certificates of deposit accounts, money market accounts or simply through an online bank account are intended to be a haven to deposit and grow your money. Savings accounts should be treated as a vault where you deposit your money, but never withdraw it. If you think of it in this manner, you will be able to build a nest egg for your retirement or whatever other purpose you have for opening your savings account. A major mistake that is made by most is that they deposit their money into a bank savings account or a credit union savings account with no intention of leaving the money in the account for any length of time. Then at the first sign of difficulty or inconvenience, they reach for their savings and basically destroy their dreams of maintaining a savings account. Your savings account deposits should be considered “untouchable”, and any amount that you put away should be off-limits.

You should also look at the level of interest paid on the savings account. Once again, the intent of the average person opening a savings account is to grow their savings. Compound interest is a way to grow the money in your savings account. If you look around at the different interest rates that are paid on various savings accounts, you will see that most banks are not offering that much interest. Credit unions savings accounts have a reputation of paying higher interest than regular bank accounts. At the same time, you’ve probably seen a lot of online savings accounts offers that are paying several times the rate that your bank account may be offering. Much of this disparity is due to the fact that online banks or internet banks, do not have the same overhead costs as do brick and mortar banks.

Being able to function online allows these internet banks to pay higher interest on your money as well as offer a lot of extra perks with your savings account. Many of the online savings accounts offer interest rates comparable to or greater than CD rates offered by most regular banks. These online bank accounts are able to pay money market rates to their patrons without the restrictions that can sometimes come with a typical money market account.