Selecting a Savings Account

Interactive Video

[Picture of a wallet with money coming out of it is shown.]

Narrator: When it comes to saving money, there are different ways to go about it. Some people like to keep their savings in a bank or credit union. Others like to keep their savings in cash at home. 

[The Guardian newspaper appears with picture under World news of a mattress on the curb for garbage pickup.] 

According to The Guardian, in 2009 an Israeli woman’s daughter threw out her mother’s mattress. [A trashcan rolls in and $1,000,000 falls into the trash can.] ]without knowing her life savings of $1 million dollars was stuffed inside! Oh my!

[Multiple choice question with 3 answer options]

How do you currently keep your money secure? Select the image that best matches the way you handle your money. [Answer options: bank account, credit union, cash at home]

[Woman is still at computer looking at online bank account statement. Highlight circle emphasizes the savings account.]

In most cases, having a savings account is the smartest move. Not only does it keep your money safe, but some accounts even pay you interest. 

And interest-bearing accounts can sometimes earn compound interest. [A three-bar vertical chart shows growth from left to right and increasing dollar signs under each bar.] This means you earn money not only on what you save but also on the interest the bank gives you. [An arrow is drawn upwards from left to right to signify money growth.]

It's like earning money on top of money! [A dial labeled compound interest calculator is shown with instructions “Turn the dial to see money grow. When the dial is turned up, money and coins are added to the pile.]

[Photo of man talking to a bank teller is shown.]

Aside from the type of interest you can earn, do you know that savings accounts can differ in other ways?

[Two column chart is shown; left column is labeled perks and right column is labeled rules.]

Each account type comes with its own perks and rules; some accounts pay higher interest rates [“pay higher interest rates” is shown in the perks column] but require a higher minimum balance [“require a higher minimum balance” appears in rules column]. Some accounts charge a penalty if you take out your money before a certain time. [“charge” a penalty” appears in rules column.] And some accounts limit the amount of withdrawals you can make each month. [“charge” a penalty” appears in rules column.]

[Six different savings account options are shown: traditional savings, money market, specialty savings, high-yield savings, cash management, and certificate of deposit or CD.] Instructions say “Select each savings account option. Mark the ones you like.]

Take time to explore and understand the different savings account options out there. Think about what benefits are important to you and what features or restrictions you're comfortable with. Flip through the different savings account options and see which one might be a good fit for you. Mark the ones you like to create a short list that suits you. 

• Traditional savings
  • Pros: 
    • Easy to open
    • Available at almost any bank
    • Usually FDIC-insured
    • Branch and ATM access    
  • Cons: 
    • Lower interest rates
• Money Market
  • Pros: 
    • Higher interest rates, sometimes matching  high-yield rates
    • Possible check-writing option
    • Branch and ATM access
  • Cons: 
    • Minimum deposit requirements
    • Associated fees
    • May require higher minimum balance
• Specialty Savings
  • Pros: 
    • Widely available at financial institutions
    • Low or no maintenance fees
  • Cons
    • May have strict rules for money withdrawals
    • Lower interest rates
• High-yield Savings
  • Pros: 
    • Higher interest rates
    • Lower fees
    • FDIC-insured
  • Cons: 
    • May have minimum balance requirement
    • Often online only (few/no branches or ATMs)
• Cash Management
  • Pros: 
    • Generally higher interest rate
    • Possible check-writing option
  • Cons: 
    • Need to use brokerage
    • May not be FDIC-insured
• Certificate of Deposit (CD)
  • Pros: 
    • Higher interest rates
  • Cons: 
    • Penalty for early withdrawal

Regardless of the account you choose, it’s a good idea to make sure it’s FDIC-insured. Then your money is protected.

How much do you think the FDIC insures your money when it's kept in a financial institution? Enter your guess. [numeric field provided to enter a dollar amount] Actually, the FDIC insures up to $750,000 of your money. 

You know, that might just be the protection you need to make sure your money doesn’t go out with the trash! [trash can overflowing with money rolls across stage]