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Virtually all banks and credit unions offer traditional savings (also known as statement savings) accounts, typically an interest-earning account where the interest is compounded daily and posted to the account quarterly. With a low minimum opening deposit you can access your savings at any time at a branch or through an ATM with no penalty for withdrawal, and your account is Federal Deposit Insurance Corporation (FDIC) insured up to $250,000.
Money Market Accounts
In addition to traditional savings accounts, another type of savings account offered by banks and credit unions is a money market account. The main difference between a money market account and a tradition- al savings account is that a money market account usually pays higher interest, but also requires a higher minimum balance (somewhere between $1,000 and $2,500). In addition, you are usually restricted to between three and six withdrawals per month.
Similar to a checking account, many money market accounts will let you write up to three checks each month. Stated another way, a money market account offers a higher interest rate than a regular savings account, plus the liquidity, flexibility and accessibility of a checking account. Such an account is ideal for anyone who wants to earn a higher interest rate than a traditional savings account, while still having access to his money around the clock.
Like other bank accounts, the money in a money market account is insured by the FDIC. Should the bank or credit union go out of business (a very rare occurrence), your money is protected. Each account is insured up to $250,000. The FDIC is an independent agency of the federal government created in the early 1930s as a result of the many banks that failed on the heels of the stock market crash and during the depression. No one has lost money in a bank or credit union that was insured by the FDIC since its inception.
Savings Accounts