What are different types of savings accounts? - Article flashcards

Flashcards made from Khan Academy. The article is found in Unit 2, Lesson 3 of the Financial Literacy course.

Why is it important to check access restrictions before opening an account?

Some banks limit how many times per month you can withdraw money; checking this prevents "unpleasant surprises" when you need cash.

Traditional Savings Account

Most common type; easy to open with no fees, but offers very low interest rates.

High-Yield Savings Account

Offers higher interest rates than traditional accounts, but may require a minimum balance or have withdrawal limits.

Money Market Account

High interest rates and sometimes includes the ability to write checks, but may come with fees.

Certificate of Deposit (CD)

Higher interest in exchange for locking your money away for a fixed term (months to years). Early withdrawal usually triggers a penalty.

You are deciding whether to save for a new car or just an emergency fund. Why does this distinction matter for your account choice?

Your specific financial goals determine which account fits best; for example, an emergency fund needs high accessibility, while a car fund might benefit from a less accessible, higher-interest option.

You only have $25 to start your savings journey. What is the first thing you should check on a bank's website?

Check the initial deposit requirements.

You found a bank with a good rate, but you want to ensure you aren't missing out on lower fees elsewhere. What should your next step be?

Shop around.

You expect to move money in and out of your savings several times a month. Which specific rule should you look for?

Look for access restrictions.