Accumulation Account Acumen

The basics of Savings Accounts and Tools

By Amy Persyn

There are many accounts and savings tools out there to help you save but not all are built with the same goals in mind. Some account types focus on term, some aim to help you build savings over time while others are built for accessibility. All saving accounts are to serve as a repository where you accumulate funds (rather than transact like checking accounts). Surprisingly, many people don’t know their options and miss out on benefits by keeping their money exclusively in liquid accounts. But there are a lot of ways to maximize your savings. Here are five smart savings tools to help you make the most of your money:

1 – Open a High-Yield Savings Account

A high-yield savings account is one of the easiest ways to grow your savings passively. Unlike a traditional savings account, a high-yield savings account offers a higher interest rate, meaning your money works harder for you. Money Market accounts are often considered high-yield savings accounts. These accounts often combine the features of both savings and checking accounts with more competitive rates that can help you accumulate interest over time while allowing you greater access to your funds.

2 – Set Up Automated Transfers for Consistent Savings

One of the most effective ways to save consistently is by setting up automated transfers. By automating your savings, you ensure that you save a fixed amount on a regular schedule, whether weekly, bi-weekly, or monthly. This strategy makes saving effortless and helps prevent the temptation to spend.

With online banking tools, it’s easy to set up recurring transfers from your checking account to your savings account. You choose the amount and frequency that works best for you, and you can adjust it as needed at any time. Over time, these automated transfers can really add up, all without requiring extra effort on your part.

3 – Take Advantage of Certificates of Deposit (CDs)

If you’re looking for a way to grow your savings with guaranteed returns, consider opening a CD. CDs offer a fixed interest rate for a set period, providing a safe, low-risk investment option for those who don’t need immediate access to their funds.

With a variety of CD terms available, you can choose the duration that suits your financial goals, from short-term options to longer terms for those focused on long-term savings. Usually, the higher the term, the higher the interest rate you can earn. Check with a local banker to see if there are special offers for CDs with special terms that allow you to save even more.

4 – Specialty Savings – Holiday Club Accounts

If you’re saving for a specific reason – like, your holiday shopping – don’t overlook a specialty savings account. A Holiday Club account, for example, allows you to save throughout the year, contributing as much or as often as you’d like. Then as the holidays near, your funds are disbursed to you just in time for you to tackle your gift buying list. This disbursement often happens in early November. This is an easy way to manage your holiday budget to avoid racking up large credit card bills in the process.

5 – Consider Opening a Health Savings Account (HSA)

An HSA is a savings tool that also helps you prepare for future health expenses. If you have a high-deductible health plan (HDHP), you may be eligible to open an HSA at First State Bank. HSAs allow you to save money tax-free for medical expenses, offering triple tax advantages: contributions are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free.

Using an HSA not only helps you save for healthcare costs but can also serve as an additional retirement account, as unused funds roll over year after year. Always speak to a tax- advisor for specifics on any tax-advantaged accounts.

6 – Don’t go it alone. Bankers are a sure bet.

With so many options, you don’t have to go it alone. Bankers are there to help. As always, I recommend choosing local banking advisor who can help you put together a tailored plan. Whether you’re looking to open a high-yield savings account, set up automated transfers, or explore CDs and HSAs, we offer a variety of accounts and tools to fit your needs. Our team is here to guide you every step of the way, offering expert advice and guidance to help you reach your financial goals.

Amy Persyn, Chief Marketing Officer at First State Bank, is a lifelong Macomb County Resident. She is passionate about connecting families and entrepreneurs with information that can help them become empowered and financially literate.