When it comes to what to do with the money you've accumulated, you have many options.  How to decide which one is right for you can be a daunting thought, especially if you aren't aware of the basic differences between the types of accounts.  Below is a chart explaining the basics of savings accounts, money markets and certificates here at RCU.

Before diving into the differences between these accounts, you must first understand a couple of terms:

  • Dividend Rate - The amount of money you can expect to earn on this account. Dividend rates are typically quoted with a percentage but, because dividend rates are always changing, this chart will use terms such as "low", "moderate" and "high"
  • Liquidity - How easy it would be for you to add money to or, more importantly, take money from the account once you've made the deposit
  • Accessibility - How you can access the funds you've put into the account
  • Balance Restrictions - The amount of money you must keep in the account to keep it open and/or earning dividend
  • Insured - Whether the funds that you put into the account are protected from incurring a loss
  Dividend Rate Liquidity Accessibility Balance Restrictions Insured
Savings Account low

liquid;
deposit and withdraw at any time;
no time commitments

limited transfers;
ATM card;
in person (teller)
low yes
Money Market low-to-moderate

liquid;
deposit and withdraw at any time;
no time commitments

limited transfers;
limited check writing;
ATM card (possible);
in person (teller)
low-to-moderate yes
Certificate moderate not liquid;
penalty assessed if withdrawal is necessary before
certificate has reached its time commitment (term maturity)
transfer;
in person (teller)
moderate-to-high yes

Due to the large variety of options offered in investment accounts, they are not reflected in the above chart.  Most of these accounts are not liquid, accessibility can be limited, balance restrictions are often high and most investment accounts are not insured.  However, investment accounts offer the highest potential return, making them attractive to those who have no short term plans for their savings.


This information has been provided by Financial Wisdom Marketing Services, Inc. and is for educational purposes only.  Content from Financial Wisdom and/or Redwood Credit Union is not, in any way, intended to provide legal, tax, or financial advice.