Can You Do Better Than A Regular Saving Account?

Are you confident that you are getting the most for your money in a regular saving account? Any type of savings account is better than no savings at all. But what if you had the chance for your money to work harder? While a regular saving account is appropriate for some people, there are other more profitable options for stocking away money for the future.
Featured School     
History of The Regular Saving Account

The regular saving account started in the early 20th century and was known as the Christmas Club. Customers made regular deposits to the bank each week and withdrew the entire balance at Christmastime. At that time the accounts paid very little interest and included several restrictions for early withdrawal. In the 1980's the Christmas Club version of the regular saving account was pretty much eliminated due to the availability of much better saving options.

Why Is a Regular Saving Account Attractive?

A basic savings account pays interest on the money in the account. A regular saving account lets customers withdraw money without any type of penalty. The account is a viable option for people who do not have large sums of money, or for linking to a checking account for overdraft protection. But these conveniences are not enough to make a regular saving account the best option for all customers.

Interest

A common characteristic of a regular saving account is the extremely low interest rate that it pays. This is largely because money in the account is liquid; that is, the customer is not obligated to leave the money in the bank for a certain period of time. But when it comes to getting the most out of your hard earned money, especially a substantial amount, a regular saving account will not fit the bill.

Other Saving Options

By some estimates, sixty five percent of Americans have an active regular saving account. This savings account may be a small amount of money that they can access in an emergency, but the best way to get the most is through other savings and investments. But for many others, the account is one component in their total investment portfolio and not relied upon for a good return.

A Certificate of Deposit, or CD, is a far better savings option. CD's are time deposits in which the customer agrees to allow the bank to keep the money for a certain period of time. For this commitment the depositor is paid a much higher interest rate. High yield savings require a larger initial deposit and a minimum balance among other requirements, but the return is much higher, especially online high yield savings accounts. Money market accounts and investor savings are among other savings choices that make more money for customers than a regular saving account.

The basic purpose for any savings account is to have a secure place to keep money and earn interest at the same time. At a minimum, a regular saving account is certainly appropriate for keeping funds that can be quickly accessed without penalty. But when there is money available that is not needed right away, put it to work through more lucrative saving alternatives.