How to Choose the Right Savings Account for Your Goals

You may know you need a savings account, but deciding which one, or how many, to open, can be overwhelming.   

There are several types of savings accounts, and each is designed for a different financial goal. Common savings products include traditional savings accounts, high-yield savings accounts, share certificates and money market accounts. 

The best savings account for you depends on four main factors: how soon you need the money, how easily you want to access it, how much you could earn, and any balance or account requirements. For example, our primary savings account may work well for everyday savings, while a high-yield savings account such as our Service+ Savings, may offer a combination of accessibility and stronger earning potential for larger savings goals. A share certificate may be a better fit for money you will not need for several months or years.  

Here are how the most common types of savings accounts work and when you might use each one.  

What Is a Primary Savings Account? 

A primary savings account is a basic account that allows you to earn dividends while keeping your money readily accessible.  

It can be a good starting point for an emergency fund, short-term savings or money you simply want to keep separate from your checking account.  

At Service Credit Union, a Primary Savings Account also establishes your credit union membership, with a $5 minimum deposit.  

Best for: Everyday savings, starter emergency funds and easy access to your money.  

What Is a High-Yield Savings Account?  

A high-yield savings account generally offers a higher Annual Percentage Yield, or APY, than a traditional savings account while still allowing you to access your funds.  

That can make it a good option for an emergency fund, future purchase, vacation, home project or other short- to medium-term goal.  

Some high-yield accounts have qualifications for earning their highest rate. For example, Service Credit Union’s Service+ Savings requires a Service Credit Union checking account and qualifying direct deposit to earn its relationship APY.  

Best for: Emergency funds and savers who want to earn more while keeping their money accessible.  

What Is a Share Certificate?  

A share certificate is a credit union savings product that allows you to deposit money for a set period of time while earning a fixed dividend rate for the term. It is similar to a certificate of deposit, or CD, offered by a bank, except it earns dividends, while CDs earn interest.  

With a share certificate, you choose a term and leave your money deposited until the maturity date. Withdrawing funds early may result in a penalty.  

Certificates can work well for money you know you will not need right away, such as savings for a future car, home down payment or major purchase.  

Service Credit Union offers share certificates with multiple term options to fit different savings timelines.  

Best for: Money you can set aside for a specific period and savers who want a predictable return.  

What Is a Money Market Account?  

A money market account is a savings account that combines accessibility with tiered dividend rates that may increase as your balance grows.   

Unlike a share certificate, you don't have to commit your money for a set term. Money market accounts, such as Service Credit Union's Money Market Account, may also offer tiered rates based on your balance.  

Best for: Larger savings balances and people who want to keep their money accessible.  

High-Yield Savings vs. Money Market vs. Share Certificate  

The biggest difference between these savings options is how much access you have to your money.  

A high-yield savings account may be best if you want to earn a competitive rate while maintaining easy access.  

A money market account may make sense if you have a larger balance and still want flexibility.  

A share certificate may be a better fit if you can leave the money untouched for a set period and want a predictable fixed return.  

You also don't have to choose just one. Different savings accounts can serve different purposes.  

For example, you might keep an emergency fund in a high-yield savings account and use a share certificate to save for a vacation further out in the future.   

What Is the Best Savings Account for an Emergency Fund?  

For many people, a high-yield savings account can be a good choice for an emergency fund because it keeps your money accessible while offering the potential to earn more than a traditional savings account.  

How Do You Choose the Right Savings Account?  

Consider these questions before deciding:  

• When will I need the money? Money you may need soon should generally remain accessible.  
• How important is earning a higher rate? Compare APYs, dividend rates and account requirements.  
• How much are you saving? Some products may be better suited for larger balances.  
• Are you saving for multiple goals? Separate accounts can make it easier to stay organized.  

Find a Savings Account That Fits Your Goals  

There is no single best savings account for everyone. 

A primary savings account provides a simple place to start. A high-yield savings account may help your emergency fund or other savings earn more than a traditional savings account.  A money market account may work well for larger balances, while a share certificate can offer predictable growth for money you will not need right away.  

Service Credit Union offers a range of savings options, including Primary Savings, Service+ Savings, Money Market Accounts and Share Certificates, to help members find the right fit for their financial goals.