Savings Accounts

The Many Varieties of Savings Accounts If your parents did a good job teaching you about saving money, you had a piggy bank somewhere in your room growing up. Like many parents, they probably coaxed you into adding to it by offering to match all your deposits. Then, at some point, you just started contributing your babysitting or lawn mowing money on your own and watched as your nest egg grew. After years of pennies and quarters, you hopefully amassed a small fortune. Ultimately, you realized it would fare better in a savings account at a bank. Not only is a deposit account, like a savings account, a safe place to store your money (thanks to the FDIC or NCUA), it is also a great place to let your money grow and prosper with compounding interest. Most financial novices are familiar with the terms of traditional or high yield savings accounts. Both these accounts allow depositors to store their money in the bank and earn a rate of return while keeping the balance liquid. However, these are not the only options available to you. There are a variety of savings account types that you may want to take advantage of.

Savings Accounts for Minors

These types of accounts are only offered to those under the ages of 18 and are a great way to move money from a piggy bank to a real financial institution. Proof of age is required and in return, children will have their money safely on deposit, can earn a decent rate of return and can avoid many fees associated with typical savings accounts.

Health Savings Accounts (HSA)

President Bush first approved health savings accounts in 2003 when he signed the Medicare Bill. The U.S. Treasury states that HSA accounts have been “designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.” There are certain caps on how much money can be deposited into a HSA annually and the money can only be used to pay for qualified medical expenses. Recently, the interest rate for HSAs has been higher than traditional savings accounts, so if you could benefit from an HSA, this may be a great opportunity to grow your savings.

Christmas/Holiday Savings Accounts

Sometimes an economic downturn can really ruin the holidays. Organization and planning is the key to your future fun and a Christmas or other holiday savings account is an excellent way to do so. These types of accounts tend to be short-term savings accounts that allow a maximum deposit amount. However, that deposit amount will be entitled to a high yield interest rate that can turn your spare pennies into a bundle of cash. They typically mature right before the holiday shopping season begins (access to funds is limited the rest of the year). The best way to decide what type of savings opportunity is right for you is by building a budget and figuring out what you really need to save for. This practice can help you decide if one of these savings account options are right for you.