The Ultimate Guide to Savings Accounts


There are 4 main types of savings accounts to help you meet your goals.

Saving money is one of the biggest keys to achieving a secure financial future. Banks offer several types of savings accounts, each with its own advantages — making some types of accounts better than others for meeting certain savings goals.

In this article, we describe the different types of savings accounts, so you can choose the right one based on your personal goals.

Different Types of Savings Accounts

Williams lists four main types of bank savings accounts:

  1. Regular savings account
  2. Money market account
  3. Certificate of deposit (or CD)
  4. Automatic savings plan

Money market account vs. savings account

Regular savings accounts and money market accounts are similar in that they’re both bank accounts that pay interest to savers. One of the biggest differences is in how money is accessed. With a money market account, you’ll receive a debit card and checks just like you would with a regular checking account. However, regular savings accounts feature ATM access but not checks.

To access money in a regular savings account, you’ll usually need to make a counter withdrawal at the bank or use an ATM. With both regular savings accounts and money market accounts, there is a limit (per federal law) of withdrawal transactions per statement cycle. Any withdrawals above this are subject to an excessive transaction fee.

Another difference is that money market accounts pay higher interest rates than regular savings accounts. However, they also typically have higher minimum balance requirements. If the account balance falls below the minimum, a monthly service charge will be assessed.

This fee can eat into your earnings, so you should make sure you can maintain the minimum balance before opening a money market account. If you can’t, you might be better off choosing a regular savings account with a lower minimum balance requirement.

Both types of accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). So you’ll receive the same government protection for your money regardless of which type of account you choose.

CDs: How does a certificate of deposit work?

Certificates of deposit are different from regular savings accounts and money market accounts. With a CD, you commit to leaving your money in the bank for a certain period of time — usually between three months and ten years. This is referred to as the CD’s maturity.

In exchange for this lack of liquidity, you’ll earn a higher interest rate on a CD than you will on a regular savings account or a money market account. The longer the CD’s maturity, the more interest you’ll earn. For example, a three-year CD is currently paying between 1.0 and 1.25 percentage points higher than a three-month CD.

“Before purchasing a CD, you should be sure that you won’t need this money before the maturity date. Penalties are assessed on early withdrawals from CDs that will reduce, if not completely wipe out, your earnings.

Another factor to consider is that CDs don’t feature ATM cards or checks, which makes them the least liquid of the different types of savings accounts. Like regular savings accounts and money market accounts, they are also insured up to $250,000 by the FDIC.

Automatic savings plan

If you want to start saving money on a regular basis, then an automatic savings plan might be the best option. With this account, money is automatically transferred from a checking account into a special savings account at regular intervals, such as monthly or bi-weekly.

“Starting an automatic savings plan is the best way to pay yourself first, which is one of the keys to successful long-term savings. It enables you to save money without having to think about it, which makes saving easy and can help establish a lifetime saving habit.

Automatic savings plans typically pay higher interest rates than regular savings accounts; in fact, the rates currently are comparable to money market accounts and CDs. And the money is easily accessible via ATM and in-branch, online or telephone transfers.

This makes automatic savings plans a good option for emergency savings to cover unexpected expenses like home and car repairs and big-ticket items. 

You can set up a savings account from Cadence Bank with an automated monthly transfer of just $25 from a Cadence Bank checking account. Of course, the higher your automated transfer amount, the faster your savings will grow.

Which Account is Right for You?

When deciding which type of savings account is right for you, you don’t have to take a “one and done” approach. It might make sense to open multiple savings accounts to help you accomplish different goals.

For example, if you have money that you know you won’t need for at least two or three years, consider opening a longer-term CD to earn the highest possible interest rate. Conversely, if you want to build an emergency savings fund, you’ll need maximum liquidity so you should choose an account that makes it easy to access your money, such as a money market account or automatic savings plan.

Cadence Bank: Here to help

Your banker can help you choose the right savings account (or accounts) based on your goals and objectives. Here at Cadence Bank, we have in-depth conversations with our customers so we can make the right recommendations based on your savings goals.

Please contact Cadence Bank if you have more questions about choosing the right kind of savings account. One of our personal bankers would be happy to meet with you and help you make the right choice.


This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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