The Best Types of Savings Plans

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Whether you need a short-term savings account to set aside funds for a major upcoming purchase or want to have a plan for meeting unexpected expenses, it is important to find the best type of saving plan for your individual needs. Choose from the following types of savings plans based on whether you need instant access to your money and how large an initial investment you make.


One of the most important aspects of a savings plan is knowing that your money is secure. Bonds, or term accounts, are appealing for this reason. Bonds are basically savings plans that offer you the most competitive rates of interest, but require that your money be inaccessible for a specified time, usually one to five years. Though most providers of this type of savings plan do not allow you to withdraw funds before the date of maturity, a penalty will be incurred if this is a possibility. You are not generally able to add money to your initial deposit once you open a bond or term account. Most bonds provide you fixed interest rates from the time you open the account until its date of maturity.

Regular Savings Accounts

Regular savings accounts are an ideal way to begin saving for the unexpected. Most savings accounts require a small initial deposit, and you can withdraw money from this type of savings plan whenever necessary.

Money Market Savings Accounts

This is the best savings plan for people who can initially invest a large amount of money. Money market savings accounts pay you a higher interest rate than regular savings accounts because funds in your account are invested in bankers acceptances, repurchase agreements and government securities such as Treasury bills, certificates of deposit and savings bonds. This type of savings plan is ideal for people who want easy access to their money, high interest rates and the possibility of a cash bonus based on your account balance.

Certificates of Deposit

With this type of savings plan, the bank holds onto your money for a specific time that can range from a few weeks to several years. A guaranteed interest rate is provided for the time you set your money aside for. Certificates of deposit can be low risk investments and one of the best retirement savings options as they allow you to accrue interest continually throughout the deposit term. You can accurately calculate your expected earnings amount. This type of savings plan normally requires a bigger minimum deposit than money market or regular savings accounts. There is normally a penalty if you withdraw funds before the maturity date.

About the Author

Ripa Ajmera has been writing for six years. She has written for, General Nutrition Center (GNC), TCW Finance, Alliance for a New Humanity, Washington Square News and more. She was a Catherine B. Reynolds Scholar from 2006-2008 and graduated from New York University Stern School of Business with an Honors degree in Marketing.

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