What Type of Savings Accounts Do You Need

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If you have a checking account, you probably also have a savings account, which can be a convenient place to stash some money off to the side so it’s not all sitting in your main transaction account. A savings account can also be a safety net if you accidently overdraw your checking account and you enroll in overdraft protection.

But if you’re only relying on your linked savings account as the main place you save up your dough, you might be tempted to dip into your savings from time to time and you may be missing out on some better interest-bearing opportunities.

If you want take your savings to the next level, just what types of savings accounts do you need? Here are the basic account types you need in your savings account portfolio:

An online savings account. Since we already manage so much of our life and our money online, it naturally makes sense to open up a savings account online. But an online savings account isn’t just about being able to check your balance from your laptop or phone. Online savings accounts usually provide higher interest rates than traditional savings accounts - anywhere from 0.80 percent to 1 percent interest. While that might not seem like that much money, it can significantly add up over time, especially as your account balance grows.

An emergency fund separate from your checking account. The whole point of an emergency fund is to use it in emergencies, which means it’s probably smart to keep this money as far away from your regular checking account as possible. But it’s a tough balance to strike: it’s important to make sure you can access your emergency fund in case of a true emergency, yet this money also needs to be hard to get to so you’re not tempted to dip into it. Consider opening up an emergency account with a financial institution separate from your normal bank.

A goal-oriented savings account. It’s can be easy to lose motivation while saving money, so naming your account after your savings goal can be a simple way to stay motivated and prevent you from dipping into your savings.

About Stephanie Halligan

Stephanie is the founder of The Empowered Dollar, a site dedicated to helping millennials to fix their finances and find their stride in money and life. When she's not blogging, Stephanie is designing school curricula and online games to teach students about smart money management.

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