Ways To Save Money and Build Interest With Your Bank

Ways To Save Money and Build Interest With Your Bank

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Building a secure foundation for your financial future starts with smart saving strategies. One of the best ways to make your money work harder for you is by utilizing bank accounts that accrue interest. From smart savings accounts to certificates of deposit (CDs) and individual retirement arrangements (IRAs), there are various options to help you grow your wealth.

Understanding which way to save money with your bank is right for you is an important first step on the path toward prosperity. In this blog from the friendly team at Landmark National Bank, we'll explore the different types of bank accounts while sharing some bank-saving tips and money-saving strategies you can utilize in your life.

Explaining the Different Types of Bank Accounts

There are various ways to build interest in a savings account, each of which presents unique features and benefits. Understanding the intricacies between them all can help you choose the right one for you based on your financial goals and needs.

Smart Savings Account

A smart savingsaccount offers ease of access, and automated savings, with many banks offering automatic transfer options to help you save consistently.

To maximize the benefits of a smart savings account, set up automatic transfers from your checking account to ensure consistent savings. Compare interest rates and account features to find the best option, and aim to maintain minimum balances, as some accounts offer higher rates for maintaining a minimum balance.

Youth Savings Account

Youth savings accountsare specifically designed to instill good savings habits in young people, often coming with lower fees and higher interest rates. Benefits include access to educational tools to help young savers learn about money management, attractive interest rates to encourage saving, and parental controls that allow parents to monitor their children's savings.

To maximize the benefits of a youth savings account, start early by opening an account as soon as possible. Involve your child in managing their account to teach them the importance of saving, allowing them to take out money occasionally for a fun purchase. As time goes on, monitor their progress and continue to keep them on track to reach their goals.

Optimum Money Market

Optimum money market accountsare the best of both worlds between savings and checking accounts. They typically offer higher interest rates and come with check-writing privileges and debit card access. They also include higher competitive interest rates than regular savings accounts, liquidity that provides easy access to your funds through checks and debit cards, and FDIC insurance coverage that ensures your money is safe.

Maintain a high balance to maximize the benefits of a money market account, as these accounts often have tiered interest rates that reward higher balances with better rates. You should also be mindful of the number of withdrawals you make, as you don't want to rack up fees.

Certificates of Deposit (CDs)

Certificates of deposit (CDs)are time-deposit accounts that offer a fixed interest rate for a specific period of time. They require you to lock in your money anywhere from a few months to several years. The benefits of CDs include guaranteed returns with a fixed interest rate, higher interest rates compared to savings accounts, and the security of FDIC insurance.

To maximize the benefits of CDs, consider laddering your investments by investing in CDs with different maturity dates. This allows you to take advantage of higher rates while maintaining liquidity. Avoid early withdrawals, as withdrawing money before the CD matures can result in penalties, and when a CD matures, consider reinvesting in another CD to keep earning interest.

Individual Retirement Arrangements (IRAs)

Individual retirement arrangements (IRAs)are retirement savings accounts that present tax advantages and are broken into two categories, including traditional IRAs and Roth IRAs. Traditional IRAs offer tax-deferred growth, while Roth IRAs provide tax-free growth and withdrawals. IRAs benefit from compound interest, significantly growing your retirement savings over time, and they offer various investment options, including stocks, bonds, and mutual funds.

To maximize the benefits of IRAs, make regular contributions to maximize compound interest. It's also key that you choose the right type of IRA based on your current and future tax situation and diversify your investments to reduce risk and enhance returns.

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How To Choose the Best Bank Account for Savings

Selecting the right type of bank account depends on your financial goals, timeline, and risk tolerance. For short-term goals, high-interest savings accounts or money market accounts provide easy access and competitive rates. For long-term goals, IRAs are ideal for retirement savings due to their tax advantages and growth potential. Anyone in between should consider CDs, as they offer higher returns for funds you don't need immediately.

Practical Tips for Saving Money

To make the most of your savings, avoid unnecessary fees by meeting minimum balance requirements or only using your bank's ATMs. You can leverage cash-back rewards by using bank accounts that offer the chance to earn extra money on purchases and automate savings by setting up automatic transfers. As time passes, regularly review your accounts and stay updated on changes in interest rates and fees to ensure you're making the most of your money.

Get Expert Advice From Landmark National Bank

Working with a trustworthy financial partner is a critical part of any successful financial journey. Landmark National Bank has decades of experience providing assistance with savings accounts, checking accounts, personal loans, and more. We're here to help you understand the best ways to invest and manage your money no matter where you're at in life.

Have questions about what it takes to get started? Contact Landmark National Bank todayor visit a bank branch locationto get started!

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