Instant Access Savings Account

When it comes to savings accounts you do have several choices.  You can opt for a longer term higher interest rate savings vehicle, such as a CD.  Or you can go for the traditional  instant access savings account which will allow you the most flexibility when accessing your money but will also pay the least interest.

It's important that you have a basic understanding of how a bank makes money. This knowledge will make it easier for you to decide which type of account fits your needs the best.  A bank makes money by lending money to people for homes and cars.  They charge interest on the money they lend and this is how they can generate a profit.  The reason some types of accounts make more money than others is due largely to the fact that the bank can use the money in your long term account for a longer period of time. That means they make more money, and so do you. 

Before you choose which type of account is best for you, it's important to look closely at your lifestyle and your overall assets.  If you have a secure source of income that is unlikely to diminish or you already have a liquid type account, you may find it makes more sense to invest in a longer term CD with it's higher interest rate. 

You will have a safer investment than say stocks, or bonds, and it will earn more than a savings account.  It's a great option for someone who wants their money to work for them but still have a high level of security.  The downside to a CD is that you have to commit to keep your money in the account for the full term. You have many choices in how long a term you want, they range from a few months up to a decade, or more. 

If you decide to take your money out before the CD reaches it's maturity date you will lose a significant amount of your interest.  This type of investment isn't a good option for anyone who has little in the way of liquid assets and/ or who may be in a volatile job market.

Another option that allows a little more flexibility than a CD and will also be insured but will earn up to twice what a savings account would earn is a money market account.  This type of account enables you to write checks, though the number of checks you can write is usually limited to about 3 a month, so it's more flexible than a CD, but it still earns a fairly competitive interest rate. These accounts can sometimes require a large deposit and minimum balance.  Make sure you check to find the best option for you.

Instant access savings account is a great way to put your money to work for you while still keeping it available for that proverbial rainy day.  Before you choose this route though it's important that you understand the other options available to you.  The liquidity of your money needs to be balanced against how much your money can make for you.  Only you can decide which option is best for you and your circumstances.