by | May 26, 2023 | Personal Finance | 0 comments

You’ve probably heard that it’s a good idea to “save money for a rainy day.”  But where?  There are loads of options out there!  Here are some considerations when stashing away your hard-earned cash. 

Savings Accounts 

Probably the easiest and most familiar place for most people to park their savings, savings accounts usually sit right next to your checking account at your bank or credit union.  But did you know there are a few flavors to savings accounts?  Specifically, there are “traditional” savings accounts and there are “high yield” savings accounts.  As the term states, a high yield savings account generally pays you more interest than a traditional savings account. 

What to watch out for:  

Pathetically low rates at big name banks who hope you aren’t paying attention to the fact that interest rates have skyrocketed over the past year.  As I write this in May 2023, some well-known banks are still paying a mere 0.01% on their savings accounts.  In contrast, you can find reputable online banks paying over 4.0% (  If you are still making next to nothing in your savings account, you should probably consider shopping.    

*Check out my other article on 3 Considerations for Savings Accounts here. 

Also worth noting is that you are usually limited to 6 monthly withdrawals from traditional savings accounts (after all, they’re meant for saving, not for frequent transfers – use your checking account for that!).  If you exceed this limit, you could get hit with penalty fees.  


Many people are also familiar with the term “CD” because they are usually sold at a bank.  Unlike savings accounts, these “Certificates of Deposit” have a unique time factor: you put your money away for a specific amount of time, and the bank or credit union credits your account with a guaranteed rate of interest – IF you keep the money there for the full term.  CD terms can be anywhere from 1 month to 5 years.  If you take your money out before the end of the term, you may have to pay penalties.  (So, if you might need your money before the CD term ends, this is not a good idea for you.)   

What to watch out for: 

With CDs, you are locking in a guaranteed rate for a specified amount of time, so even if you know you won’t need to take out the money early, you should still be careful.  Last year, as interest rates were going up, I advised clients not to purchase CDs because they were likely to lock themselves into a low rate and be stuck there while interest rates continued to climb.  And that turned out to be the case.   

Right now, we are not sure if the Fed is done raising rates or not, so it could be OK to buy CDs – though I still advise caution.  If you can find a good rate in a more liquid investment (like a high yield savings account or money market account), that still might be the way to go while the Fed continues to sort itself out.   

Also beware teaser rates that only last a short time or carry special conditions for you to get the advertised rate.  Be sure to ask about the terms before you purchase a CD.  

Money Market Accounts 

The last of the savings triad, money market accounts aren’t as familiar to most folks, perhaps because they’re a bit of an odd hybrid between a savings account and a checking account.  They’re also easily confused with money market funds, which are NOT the same thing!  (Read on.)  They can still be a decent option for your savings to earn some interest.  Money market accounts usually offer check writing and ATM access, much like a checking account, but ideally earning more interest than a checking account does.   

What to watch out for: 

Tiers.  Interest rates may be “tiered,” which means you could earn a lower rate if you only have a small amount of money in the account.  You may need a higher deposit to earn the higher advertised interest rate.  Be sure to ask or read the fine print.    

Terminology.  Money Market Accounts are not the same as Money Market Funds.  Here’s where it can get confusing.  Money Market Funds are investments.  Unlike the bank accounts mentioned in this article, funds are not insured by the FDIC.  Instead, they are mutual funds that own high-quality short-term debt made up of mostly US Treasury securities.  While considered the safest investments out there, they operate differently from bank accounts.  Technically, Money Market Funds could potentially see volatility (price fluctuations) if the US were ever to default on its debt.  

Pro Tip! 

With any of these savings accounts, keep in mind that you will be paying taxes on all that lovely interest that you are earning.  Each year, the bank or credit union should issue you a form 1009-INT (as in “Interest,” get it?) so you can claim this properly on your tax return.  Not a deal-breaker, just good to know.  

Bottom Line 

Saving money for a rainy day is pretty much always a good idea.  Just be aware of WHERE you are stashing your cash, and make sure your account matches your needs.  After all, you want your money to work as hard for you as you did for it!