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Whether you’re saving for a down payment on a house or for an emergency fund, where you stash that cash is almost as important as actually setting the money aside. Beyond a basic savings account, all savings options aren’t created equal—they vary in interest rates and how often you can access your money.
Savings options, though, have become more attractive these days due to rising inflation and general economic uncertainty—exacerbated by troubling realities, including war and record-high gas prices. It’s a time when many people aren’t as concerned about getting a huge return from their savings; they just don’t want to lose money, and they want the peace of mind that comes from knowing their hard-earned cash is secure.
If you can earn a few bucks in the process, even better. And that’s the silver lining here: As the Federal Reserve raises its interest rate—it has recently to combat inflation, and it may go further—some banks may raise rates on their savings accounts. (In particular, certificates of deposit, better known as CDs, have become a more attractive destination for long-term savings; see section below).
With that in mind, here are four common types of savings accounts and information to help you decide which best suits you.
Take your basic savings account, add higher-than-average interest rates and you’ve got a high-yield savings account. These accounts typically require a higher opening deposit and monthly minimum balance, but they also give you more flexibility to make withdrawals. They often are available from online banks, so there is no physical branch to visit, but you can use an ATM card and online banking.
When to consider: When you want to grow your savings over time faster than you would in a personal savings account, or for a specific short-term savings goal, such as buying a car.
Take note: Interest rates are variable and can fluctuate at any time.
FDIC insured: Yes, up to applicable limits.
This savvy saving strategy will help you put aside money for a goal that’s more near-term, such as a vacation.
A money market savings account lets you write a limited number of checks from it, but it also often has a higher minimum monthly balance requirement than a traditional savings or checking account. The interest rate typically tops that of a basic savings account, but less than a high-yield savings account.
When to consider: A money market account is a smart place to store a large chunk of money, like an emergency savings fund—you can even write a check directly from the account to cover an unexpected expense.
Take note: There are typically restrictions on the number of electronic transfers you can make from the account each month.
FDIC insured: Yes, up to applicable limits.
These are very different from savings accounts. Certificates of deposit—or CDs—usually earn a specific interest rate over a predetermined number of months or years. You can’t access your money during that time without paying a penalty. The longer the term of your CD, the higher the interest rate you’ll earn.
When to consider: If you have a long-term savings goal—such as funding your middle schooler’s college savings—and don’t mind losing free access to your money while you save.
Take note: While very low-risk investments, CDs are also typically very low yield.
FDIC insured: Yes, up to applicable limits.
Despite their downside, CDs may deserve another look. According to a report by Bankrate.com—an independent comparison service that provides rates and financial information—CD rates are headed up this year, with the Federal Reserve planning at least two increases in key interest rates. Greg McBride, CFA, Bankrate.com’s chief financial analyst, is predicting the national average for one-year CDs will rise to 0.35% while the average for the five-year variety will jump to 0.56%. McBride forecasts that the highest-yielding CD rates in 2022 will likely more than triple those average rates.
An individual retirement account (IRA) lets you save for retirement—and get tax breaks. With an IRA savings account, you can start saving money toward retirement, contributing money whenever you desire. You’ll earn interest but won’t immediately be charged taxes on it. Once you have enough money saved, you can open an IRA CD, which has a higher minimum opening deposit. Like a regular CD, your retirement savings will be unavailable without penalty for a set number of months or years. For CDs, you can choose between Roth IRAs (where your taxes are taken out upfront) and traditional IRAs (where your taxes are taken out when you withdraw the money after retirement).
When to consider: When you want to supplement your savings accounts with one specifically for retirement. An IRA savings account is ideal if you want to contribute small amounts over time toward retirement rather than a large sum upfront.
Take note: For long-term, tax-savvy savings success, this may be your best bet.
FDIC insured: Yes, up to applicable limits.
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Annual Percentage Rate (APR)
We may change APRs, fees, and other Account terms in the future based on your experience with ACG Card Services and its affiliates as provided under the Cardmember Agreement and applicable law.
1Cash back can be redeemed in the form of a statement credit or ACH deposit ($25 cash back minimum redemption). Cash back is not earned on business related transactions or activities. You may not redeem cash back, and you will immediately lose all of your cash back, if your account is closed to future transactions (including, but not limited to, due to Program misuse, failure to pay, bankruptcy, or death). Cash back will expire at 11:00 p.m. Central Time on the last day of the calendar quarter that is five (5) years from the date on which they are earned. Account must be open and in good standing to earn and redeem rewards and benefits. Upon approval, please refer to your Cardmember Agreement for additional information. Cash back is earned on eligible net purchases. Net purchases are purchases minus credits and returns. Not all transactions are eligible to earn cash back, such as Advances, Balance Transfers, and Convenience Checks and other advance transactions as defined in the Cardmember Agreement, as well as interest charges and fees do not qualify. U.S. Bank cannot control how merchants classify their business or transactions and reserves the right to determine which Purchases will qualify in which category. Earn 2% per dollar for qualifying net purchases made with the card through any participating AAA Club when AAA is the merchant of record, on qualifying net insurance purchases (MCC = 6300) and at eligible retail travel merchants. AAA Clubs located in Northern California, Nevada and Utah are not participating AAA Clubs and purchases made at those clubs will not qualify for 2%. Earn 4% per dollar for qualifying net purchases on AAA purchases, travel and insurance for your first 6 months up to $6,000. After that, earn cash back in the standard 2% category. Foreign Transaction Fee: None.
2 Benefits are subject to terms, conditions, and limitations on the amount of coverage. Travel and Emergency Assistance Services help in coordinating medical, legal and travel services while away from home. Rental Collision Damage Waiver coverage and peace of mind for damage due to collision or theft of most rental cars. Certain terms and conditions apply. Please refer to your Visa Guide to Benefits for details
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This card is issued by U.S. Bank NA dba ACG Card Services, pursuant to a license from Visa USA Inc. Equal Credit Opportunity Lender
*Annual Percentage Yield (APY) is valid as of 11/26/2024. Personal accounts only. Rates are variable and may change without prior notice. $100 minimum balance to open and avoid fees. Fees may reduce earnings. $250,000 maximum opening deposit when account is opened online. After online opening deposit is verified, you may deposit additional funds to your account. $500,000 maximum balance. Auto Club Trust, FSB.
**Annual Percentage Yield (APY) is accurate as of 11/26/2024. Rates are variable and may change without prior notice. Interest rates are fixed until initial maturity after the account is opened. A $1,500 minimum deposit to open the account and obtain the APY is required. A penalty may be imposed for early withdrawal. Fees may reduce earnings. Personal accounts only.
†Annual Percentage Rate (APR). Rates and terms effective as of 10/11/2024. APR is accurate as of 10/11/2024. Advertised rates and terms are subject to change without prior notice. Additional terms and restrictions may apply. Other loan rates available. Subject to borrower qualification. Advertised rate includes a 0.25% discount when you set up automatic payments from any checking or savings account. Rate is variable. Offer valid on personal vehicle loans only. Criteria to receive the stated APR: Loan term 48 months or less new or used, model year 2018 – 2024 with a credit score of 720 or higher based on the Vantage scoring model. Buyer is responsible for all state or local fees. Auto Club Trust, FSB uses a managed credit program and final APR is dependent on your credit score. An auto loan with an APR of 5.49% for a $20,000 loan at a term of 48 months, your estimated monthly payment would be $465. An auto loan with an APR of 5.74% for a $20,000 loan at a term of 48 months, your estimated payment would be $467. Private party sales will not be financed.
††Terms and Conditions apply. Offer valid for loans on vehicles purchased through the AAA Auto Buying Program from a TrueCar, Inc. (TrueCar) Certified Dealer; and approved and funded by Auto Club Trust, FSB. Applicant must submit the Member Price Summary provided by TrueCar during the application process. Must be an active AAA member to receive the additional TrueCar discounted rate. Loans offered by Auto Club Trust, FSB. Equal Opportunity Lender.
Member Savings currently not available in all states. In these states a "Target Price" is presented, which reflects a market-based example of what you can reasonably expect to pay for a vehicle configured with your desired options. Your configured vehicle may not be available or in-stock at the Certified Dealer.
TrueCar operates this information website ("Service") featuring pricing, performance, technical, and safety data available for new and used vehicles. The Service is not available in all locations.
Products are offered by Auto Club Trust, FSB. Equal Credit Opportunity Lender.
Mortgages originated by Auto Club Trust, FSB. Equal Housing Lender. NMLS# 799629
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