When choosing where to put your hard-earned cash savings, the options are many.

Unfortunately, not all savings accounts are created equal. For those who do not understand the difference, the financial impact could be large.

Below we will discuss 5 quality options to save your cash and when certain accounts may be better for you.

Categories of Cash Savings Accounts

There are two broad categories for cash savings accounts: liquid and time requirement.

Liquid accounts are those accounts which allow you quick access to your money.

Time requirement accounts are those which allow access to your money after an agreed upon period of time.

3 Liquid Accounts

Liquid savings accounts are great options for cash savings that may be needed immediately, such as an emergency fund.

1. Traditional Savings Account

A traditional savings account is one that is found at your local bank or credit union.

The benefits of these is that they are physical locations that provide secure access to your money. The negative is their low interest rate. As of February 2023, the average savings rate for a traditional savings account is 0.01%.

• Money Market Accounts

Money Market Accounts (MMA) are basically a mix between a checking account and a savings account. They are similar to a checking account as they provide you the option for checks and a debit card. MMA’s are similar to savings accounts as they offer higher interest rates than a checking account.

These can be found in a local, brick and mortar bank or credit union or at online banks. However, generally, online banks are the best option for these.

• High Yield Savings Account

The final liquid account is a High Yield Savings Account (HYSA). These are only found at online banking and provide the highest interest rate, with rates in February 2023 being as high as 3.5%.

When looking into a HYSA, there are a few notes you need to be aware of.

• You can generally only withdraw money up to 6 times a month without a fee.
• There are additional fees that may be included including not having their minimum balance requirement.
• Check the APY, or annual percentage yield, offered. This is the percentage they will give you to keep your money. Different banks may offer you a higher rate with no additional fees.
• Finally, the rates they offer are variable, meaning they will change with the market. So the number you sign up with may not be the same number in a year.

What are good options for HYSA?

Ally Bank

Capital One

American Express Personal Savings

Marcus by Goldman Sachs

Time Requirement Accounts

Time requirement accounts are great options for cash savings for a few reasons. One, these are great ways to combat inflation. Two, those who have down-the-road purchases and do not immediately need the money can let it grow. These purchases could be a vacation or downpayment on a car or house.

Certificate of Deposit (CD)

A CD is the most popular and well-known account in this category. These offer similar or higher rates than the HYSA.

These have a time requirement that generally begins at 1 year. Even though they have a time requirement, you can actually access your money early. However, that access comes with a hefty penalty and is strongly discouraged.

Bonds, bills, and notes

This category has gotten some recent momentum with the interest on I Bonds.

These can be great options for your cash savings when the rates are high. The rates, however, are variable and may drastically change from 6.89% for a 6 month I bond in January 2023 to 0.2% in 2010.

If you have more questions about bonds, bills or notes, check out episode 7 of our podcast.