If you’re looking to put money aside for future needs and watch it grow, a savings account can be a great option. However, not all savings accounts are created equal. There are actually several different types to choose from, and the best choice for you will depend on your goals, how you want to access your money, and how soon you’ll need it.
If you’re looking for easy, in-person access to your savings, for example, you might like a traditional savings account. If getting a high return is your priority, a high-yield savings account, certificate of deposit (CD), or online bank account may be a better option. There are also speciality accounts for longer-term savings goals like retirement.
Here’s the lowdown on the different types of savings accounts to have and how to choose the best one (or ones) for your needs.
Key Points
• Different types of savings accounts cater to different needs and goals and each has pros and cons.
• Traditional savings accounts provide easy access and are typically insured up to $250,000.
• Online savings accounts often offer higher interest rates due to lower operational costs.
• CDs lock you money up for a set period of time but generally offer higher interest rates than traditional savings accounts.
• Money market accounts combine features of savings and checking accounts, often including check-writing privileges and higher interest rates.
Common Types of Savings Accounts
When you’re choosing between the different types of savings accounts, it’s helpful to understand how they work. While there are many differences between the accounts listed below, one thing they generally have in common is access to online banking. According to SoFi’s April 2024 Banking Survey of 500 U.S. adults, 48% of survey respondents use online banking daily, and 26% use it several times a week.
Traditional Savings Account
Many people start their savings journey by opening a traditional savings account at the same bank where they have a checking account. SoFi’s data found that 71% of respondents with a bank account have a savings account.
If your bank is insured by the Federal Deposit Insurance Corporation (FDIC), then your deposits are insured for up to $250,000 per depositor, per account category, per insured institution. The National Credit Union Administration (NCUA) provides similar insurance for credit unions.
You can typically open a basic savings account with a small minimum deposit. And, while the interest rates on these accounts tend to be low compared to other savings options, they offer fairly easy access to your funds. Just keep in mind that some institutions limit “convenient” transactions (those made by check, debit card, or online) on savings accounts to six per month, and will charge a fee if you exceed the limit. However, there are generally no restrictions on the number of in-person withdrawals and transfers (at the teller or ATM) you can make on a basic savings account.
Online Savings Account
Brick–and–mortar financial institutions aren’t the only place where you can shop for a savings account. If you’re comfortable doing your banking online or from your mobile device, you might consider an online bank for your savings account.
Because online-only financial institutions tend to have lower overhead costs than traditional banks, they often pass that savings on to customers in the form of higher interest rates and lower, or no, fees.
While you can’t meet with a bank representative face-to-face, these accounts often come with well-designed and user-friendly websites and mobile apps, along with customer service representatives available via online chat and by phone.
Like basic savings accounts, online savings accounts may have restrictions on the number of transactions you can make per month without incurring a penalty fee.
If you choose an online savings account from an institution with FDIC insurance, then your funds will be protected, even if the online bank were to go out of business.
High-Yield Savings Account
Also known as high-interest savings accounts, this type of savings vehicle tends to come with higher interest rates than traditional savings accounts and often lower fees. They are primarily offered by online-focused banks and credit unions and, as a result, some consumers aren’t aware they exist. According to SoFi’s survey, just 59% of adults know what a high-yield savings account is and only 23% have one.
Depending on the financial institution, a high-yield savings account will likely be insured by the FDIC or NCUA up to $250,000 per depositor, per account category, per insured institution, or possibly more.
Like other savings accounts, withdrawals from high-yield savings accounts may be limited to six per month, and going over the withdrawal limit may trigger a fee. Of the 55% of people in SoFi’s survey who say they have switched banks, 29% did so because they wanted lower fees.
Learn more: Basics of High Yield Savings Accounts
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Money Market Account
A money market account (MMA) is a type of savings account that also offers some of the features of a checking account. Like a regular savings account, MMAs pay interest on your balance (often at a higher rate than a traditional savings account). Like a checking account, MMAs offer checking-writing privileges and/or debit cards, making it easy to access your funds.
On the downside, money market funds generally require a much larger initial deposit than a basic savings account. And, you could be charged fees if the balance goes below a minimum amount.
Due to the potentially higher interest rates and check-writing/debit access, money market accounts can be a good choice for emergency funds if you’ve already saved enough to meet the initial deposit.
It can be important to know the distinction between money market accounts vs. money market funds, too. The latter is a type of investment account and not guaranteed by the FDIC or NCUA.
Certificate of Deposit (CD)
Certificates of deposit, or CDs, can be a good savings tool if you don’t need quick access to your money. This type of savings account comes with a specific term — often between three months and five years — during which you need to keep your money in the account.
In return for leaving your money untouched for that time period, CDs generally offer higher returns than standard savings accounts. Generally, the longer term, the higher the interest rate — but that is not always the case.
While savings and money market accounts pay variable interest rates (meaning your rate can change after you’ve opened the account) CDs typically pay fixed rates, so your rate is likely to be locked in once you’ve deposited the cash. You’ll know these funds are safe if they’re FDIC-insured. However, if you pull your cash before the maturity date, you will usually pay a penalty, which might mean losing any interest earned. (There are some no-penalty CDs, but the interest rate is probably lower than you’d otherwise earn.)
Cash Management Account
A cash management account (CMA) is an interest-bearing account that is usually offered by a brokerage firm, an investment firm, or a robo-advisor. These accounts typically combine the features of a savings account, checking account, and (in some cases) a brokerage account. Though they are not held by banks, they may be insured by the FDIC via a partner bank. Not all are, so be sure to check if you are thinking of opening one.
CMAs may offer higher interest rates than traditional savings accounts, along with check-writing privileges and a debit card. CMAs also typically provide easy transfers to brokerage accounts, where you can invest your funds. Keep in mind, however, that interest rates may not be as high as what you could earn in a high-yield savings account.
Speciality Savings Plans
The types of savings accounts listed above can be great places to build your emergency fund or save money for a downpayment on a house. But if you’re looking to save for a more specific or longer-term goal, such as retirement or a child’s future education, you may want to open a more specialized account.
Specialty savings accounts are designed to serve a specific financial goal. They can earn interest to help you grow your money, just like other savings accounts. Some of these accounts, however, are investment vehicles, which means they can yield higher returns over the long term, but may also involve some risk.
Among the most common specialty accounts are 529 college savings plans, 401(k)s and individual retirement accounts (IRAs), health savings accounts (HSAs), and custodial accounts for a child (which are savings accounts set up and administered by an adult for a minor).
Opening a specialty savings account can make sense if you have a singular purpose for saving money. You may want to keep in mind, however, that there may be restrictions on when and how you can withdraw those funds later. Some specialty accounts, such as IRAs, 529s and HSAs, have strict tax rules for making withdrawals.
The Takeaway
There are many different types of savings accounts, and the best option for you will likely depend on how and when you want to access your money.
You might like a traditional savings account if you want to bank in person. For better interest rates and lower fees, you might prefer an online high-yield savings account or, if you won’t need the money for a while, a CD.
For more specific savings goals, such as preparing for retirement, covering health expenses, or saving for your child’s education, you may want to open a specialty savings account in addition to a more liquid savings vehicle.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What type of account is best for savings?
There are different kinds of savings accounts that suit different goals and money styles. If you like banking in-person, a traditional bank might work fine. If you prefer the convenience of an online bank, you are likely to be rewarded with higher interest rates and lower fees. If you are saving for a specific goal, a specialty account might work best. For instance, a 529 account can be a good choice if you are stockpiling funds for a child’s future college tuition.
How do I choose a savings account?
Choosing a savings account depends on your needs and goals. If you are looking for an in-person banking relationship, a traditional savings account at a brick-and-mortar bank could work well. If you want a high-yield account and low fees, and don’t plan on making trips to a branch, an online bank’s offerings might better suit your needs. If you’re able to keep your money in an account for a specific time period and want to earn a guaranteed rate, consider a certificate of deposit (CD).
Is it better to have a savings account or invest?
This depends on your goals. A savings account is best for short-term needs and emergencies. These accounts offer safety and easy access, but lower returns. Investing is generally better for long-term goals, since it can offer potentially higher returns over time. However, investing comes with risks, particularly in the short-term. Ideally, you want to have both — a savings account for short-term needs and goals and an investment account to help build future wealth.
About the author
Julia Califano
Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.
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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
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