What Are the Types of Savings Accounts?

A savings account stores funds securely, allowing money to grow through earned interest. It balances safety and accessibility, making it suitable for managing funds not immediately needed for daily expenses. Keeping savings separate from spending money helps individuals track financial progress and build an emergency fund. These accounts offer a modest return on deposits while maintaining high liquidity, meaning funds are readily available. The interest earned increases the balance without additional effort, making savings accounts a widely utilized financial tool.

Traditional and High-Yield Savings Accounts

Traditional savings accounts are commonly available at brick-and-mortar financial institutions, providing straightforward access to funds. These accounts typically offer lower interest rates, often ranging from 0.01% to 0.06% annual percentage yield (APY), although the national average can be around 0.39% to 0.59% APY. Account holders may encounter monthly service fees, which can range from $5 to $15, but these are frequently waived if certain conditions are met, such as maintaining a minimum daily balance or setting up qualifying direct deposits. All funds in these accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank, for each account ownership category.

High-yield savings accounts (HYSAs) offer significantly higher interest rates compared to their traditional counterparts, with APYs recently observed between 4.30% and 5.00%. These accounts are often provided by online-only banks, which can pass on cost savings from not maintaining physical branches to customers through better rates. While some HYSAs may require higher minimum balances to earn the stated APY or avoid fees, many are available with no minimum opening deposit or monthly balance requirements. Despite their higher earning potential, HYSAs retain high liquidity, allowing convenient access to funds.

Money Market Accounts

Money Market Accounts (MMAs) function as a hybrid financial product, blending characteristics of both traditional savings and checking accounts. These accounts typically offer interest rates that are higher than those of traditional savings accounts but can be lower than the top-tier high-yield savings options, with APYs generally ranging from 3.50% to 4.40% as of August 2025. A distinctive feature of MMAs is the inclusion of limited transaction capabilities, such as check-writing privileges and debit card access. While MMAs provide more flexible access to funds than some other savings vehicles, they are subject to transaction limits, often restricting certain electronic transfers or withdrawals to six per statement cycle. Money Market Accounts often require higher minimum opening deposits or ongoing balances, typically ranging from $500 to $5,000 or more, to avoid monthly fees or earn the stated interest rate.

Certificates of Deposit

Certificates of Deposit (CDs) represent a time-deposit account where a fixed sum of money is deposited for a predetermined period, known as the term. These terms can vary significantly, ranging from a few months to several years. Once the deposit is made, the interest rate is fixed for the entire duration of the term, providing a predictable return regardless of market fluctuations. Current APYs for CDs can range from 4.10% to 4.60% for shorter terms, with rates potentially varying for longer terms.

A defining characteristic of CDs is the penalty for early withdrawal, which means accessing funds before the maturity date typically results in a forfeiture of a portion of the earned interest. This penalty often involves the loss of several months’ worth of interest, making CDs less liquid than other savings options. In exchange for this reduced liquidity, CDs generally offer higher interest rates than traditional savings accounts, especially for longer terms.