Not all savings accounts are the same. Different banks offer different interest rates. And individual banks typically offer a number of savings accounts options to choose from.
Before opening a savings account it's a good idea to figure out how you'll be using it. Ask yourself:
All of these factors can have an impact on how much interest you can earn. A simple rule to keep in mind is that time is money. The longer you're willing to leave your money alone in an account the higher interest you're likely to earn. Similarly, banks tend to offer higher interest if you're willing to keep a minimum balance. These can range from $100 to thousands of dollars.
Types of savings accounts
While there are many different savings options available, they all fall into four main categories.
If you don't mind leaving your money alone for a longer period of time - from several months to several years - consider taking out a certificate of deposit, or CD. These often offer the highest interest of any savings option a bank allows.
Unlike regular bank accounts, you can't withdraw your money whenever you want - not without paying a steep penalty. But they come with no risk and no fees.
There are several kinds of CDs:
Keep an eye out for promotional CDs. Banks sometimes offer these as a way to lure new customers with high interest rates.