A savings account is an essential part of your financial foundation. Regularly contributing to a savings account can provide a cushion in a financial emergency and help you reach savings goals. But, there are multiple types of savings accounts, each with different attributes aimed toward different types of savers—and they’re not all equal in terms of the return on your money or how easily you can access your funds.

Here’s what to know about six main types of savings accounts to help you decide which one is right for you.

1. Traditional savings accounts

What to know: A traditional savings account is a place to store your money and earn some interest in the process. Many brick-and-mortar banks and credit unions offer a traditional savings account that earns some interest. The national average rate of interest earned is 0.41% APY as of April 2025, according to the Federal Deposit Insurance Corporation, so any account that earns above that rate is competitive, while any account that earns below that is offering a sub-standard interest rate.

Some traditional bank accounts charge no fees to own the account, some may charge a monthly maintenance fee, and others may waive the fee if you meet certain criteria, like a minimum balance or owning a companion checking account. It’s worth understanding any potential fees associated with a savings account you’re interested in as those charges can affect your savings.

Additionally, some financial institutions may limit the number of withdrawals or other transactions you can make from the savings account. Prior to the pandemic, the Federal Reserve’s Regulation D limited the number of “convenient” transactions or withdrawals from a savings account to six per month.

This rule was lifted in April 2020 to allow consumers greater access to their funds during this time of financial uncertainty. However, some banks have chosen to reinstate this limit post-pandemic and may charge an excessive transaction fee for those with savings accounts who exceed the limit set by the bank.

Best for: According to Patrick Marcinko CFP®, a financial adviser at Bogart Wealth, a traditional savings account should be considered by anyone eligible for it, even wealthy investors, because it’s designed for people who need liquidity. But it’s typically best for individuals whose primary goal isn’t to earn the highest APY possible as a traditional savings account doesn’t typically offer competitive interest rates.

Pros	Cons
Your money is easily accessible and these accounts typically allow withdrawals at any time.	Your money earns lower interest, as banks or credit unions typically offer lower rates than other types of interest-bearing products.
The Federal Deposit Insurance Corp. (FDIC) and National Credit Union Association (NCUA) insures up to $250,000 in case of a bank failure.	There are typically monthly maintenance fees, but those can be waived depending on the bank or credit union’s requirements.

2. High-yield savings accounts

What to know: High-yield savings accounts are a type of savings account that offers an APY that’s much higher than a traditional savings account.

In recent years, they’ve become increasingly popular as online banks have proliferated. Since digital-only banks have less overhead than traditional banks, they’re able to pass the savings onto consumers in the form of lower fees and higher APYs. When the Fed raises or lowers interest rates, the APY on your savings account increases or decreases in lockstep with the federal funds rate.

HYSAs are typically offered by both banks and credit unions, although generally the best rates are often found with online-only accounts. But despite higher interest rates, they might not be the best account for someone who isn’t comfortable banking online or who wants to have an in-person option for their banking.

Best for: High-yield savings accounts are particularly attractive for investors looking to earn higher returns but also for those who don’t mind online banking and don’t necessarily need to make consistent withdrawals to give their money time to grow.

Pros	Cons
Your money earns higher interest, as rates are much higher than those offered by traditional savings accounts.	There’s generally no physical branch, so transactions are strictly done online and might take one to two business days to settle.
You’re less likely to be charged a monthly fee because these accounts are offered through online banks.	These accounts often don’t come with checks or debit cards which can make it challenging to access your funds.
The FDIC and the NCUA insure deposits up to $250,000 in case of a bank failure.

Our picks for the best high-yield savings accounts of May 2025

Bank	APY*	Minimum requirements	Learn more
Varo Bank	Up to 5.00%	No minimum opening deposit Receive qualifying direct deposits totalling $1,000 or more in your account each month to earn APY	View offer at MoneyLion
Axos Bank	Up to 4.66%	No minimum open deposit Axos ONE Bundle plus an average daily balance of at least $1,500 required to earn APY	View offer at Axos Bank
SoFi® Checking and Savings (Member FDIC)	Up to 3.80%¹	No minimum opening deposit $5,000² balance required to earn APY	View offer at SoFi
First Foundation Bank	Up to 4.40%	$1,000 to open $0.01 balance required to earn APY	View offer at MoneyLion
Laurel Road	Up to 3.80%	$0 to open $0 balance required to earn APY	View offer at MoneyLion

3. Certificates of deposit

What to know: Certificates of deposit (CDs) are a type of savings account that pays fixed interest on a set amount of money for a predetermined period of time.

CDs offer competitive interest rates, but the biggest difference from CDs and traditional bank accounts and HYSAs is this—the money must sit in the account for a set time period, which could be six months, a year, or more. If you need to withdraw your money before the term ends, you’ll most likely have to pay a penalty.

Additionally, the interest rate is fixed, so you’re locked in at that rate while traditional and high-yield savings accounts have variable interest rates that can fluctuate with the market. Typically, CDs are offered by traditional and online banks and credit unions.

Best for: Typically, CDs are ideal for those who want to “lock in” high interest rates and can afford to do so by setting aside a portion of their money for a period of time. This type of account is meant for those who don’t and won’t need the money for the duration of the CDs term.

Pros	Cons
Your money earns higher interest than with a traditional savings account.	Your money is locked in for a set period of time based on the term you choose.
Interest rates are fixed, meaning they will not go down over the set period of time.	If market interest rates rise, your CD could be earning below-average rates.
Typically, there are no monthly fees associated with these accounts.	There are penalties for withdrawing funds before your term ends.
The FDIC and NCUA insures up to $250,000 in case of a bank failure.
Term options vary and can range from a few months to several years.

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4. Money market accounts

What to know: Money market accounts (MMAs) are a type of a deposit account that pay variable interest rates that can change at any time.

MMAs are typically offered by traditional banks, online banks, and credit unions. These types of accounts are sometimes referred to as “hybrid accounts,” because they often come with debit cards or checkbooks and allow regular withdrawals.

Best for: Because these accounts are a bit more restrictive than checking accounts but a bit less so than CDs, they’re best for people seeking higher interest rates without locking up their funds for a period of time. Many money accounts offer tiered interest rates, where the higher the balance, the higher the interest, so these are particularly suited for people with a good amount of cash on hand.

Pros	Cons
Your money earns interest at higher rates than traditional savings accounts.	Some banks charge monthly fees based on the balance amount, going over the withdrawal limit, or basic maintenance fees.
Your money is easily accessible, and these accounts often come with a debit card or checkbook.	You might be able to find higher yields elsewhere.
The FDIC insures up to $250,000 in case of a bank failure.

5. Cash management accounts

Cash management accounts are nonbank accounts that are managed online and earn competitive interest rates.

They aren’t strictly designed for savings but allow you to hold both your savings and investments. Cash management accounts are offered by online brokerages and online banking platforms, and typically have lower interest rates than high-yield savings accounts but higher than traditional savings accounts.

Best for: Cash management accounts are attractive for investors looking to maximize their cash with higher-than-average interest rates while also being able to easily transfer those funds into their investment portfolio.

Pros	Cons
You earn interest on money you plan to invest.	You could earn more interest with high-yield savings accounts because interest rates associated with cash management accounts typically are lower.
You have access to features geared toward both checking and savings accounts.	These accounts are not FDIC insured, but are often covered by the Securities Investor Protection Corporation, up to $250,000.

6. Specialty savings accounts

Specialty savings accounts are accounts pegged to a certain goal, such as saving for a down payment on a house, tuition payments, or retirement funds.

It can be helpful for some to have an account geared toward one thing instead of putting all your savings in one account—but that depends on your personal mindset. Some may find it motivating to have an account geared toward a personal goal because as the balance goes up, it’s more rewarding to see yourself getting closer to reaching your goal.

Best for: Specialty savings accounts work for anyone looking to save for a certain goal or fund.

Pros	Cons
You’re saving for a specific goal instead of putting all your money into one account.	Some specialty accounts have withdrawal restrictions, similar to traditional savings accounts.
These accounts typically are FDIC-insured.	Interest rates vary based on account type.

How to choose the best savings account for you

If you’re on the fence about which account type to choose, here’s what to consider to help guide you to the right type of account for your circumstances:

Do you have a defined time frame? For example if you know you plan to buy a home in the next five years, you may want to lock in a high APY in a CD to hedge against any rate downturns.
Is the account primarily for emergency funds, regular savings, or a specific financial goal? If you want to keep an emergency fund stashed away, you may want an account that lets you make as many withdrawals as you need, such as an MMA. Regular savings and specific financial goals may be better suited to traditional or high-yield savings accounts.
How much of an initial deposit can you make? Some account types or institutions have minimum opening deposit requirements , so be sure this is a number you’re comfortable with before applying to open the account..
Are you comfortable managing your money online? Some of the highest yields are often found at online-only banks. If you want in-person service, you may want a savings account with a physical location near to you instead.
Do you want to use the account primarily to make investments? Opening a cash management account gives you the flexibility to invest where you see fit.
Is the ability to write checks or make an ATM withdrawal important to you? Some traditional savings accounts don’t offer this, so you may need to look toward an MMA or cash management account.

You may also decide it’s smart to have multiple savings accounts to work toward specific goals with each.

Alternatives to savings accounts

It may be that none of the above options are the right fit for what you need. Here are a few savings account alternatives to consider:

Investment accounts: If you’re hoping for higher returns than a savings account, consider an investment account that lets you buy stocks, bonds, mutual funds, or exchange-traded funds (ETFs). While they’re riskier than having your money in a savings account, they have the potential for higher returns.
529 college savings plan: While savings accounts are great for reaching certain goals, they’re not the best choice for every goal. If you’re saving for your child’s education, you could be better served with a 529 college savings plan. With this plan, you make contributions with after-tax dollars, so when it’s time to withdraw, you don’t pay additional federal taxes—even on the interest you earned.
Health savings accounts (HSAs): HSAs are for health care-related expenses. The main benefit of this account is its tax advantages. You fund it with pretax dollars, and you don’t pay any taxes upon withdrawal. If you know you have a lot of medical bills on the horizon, this type of account might be more valuable to have than another type of savings.
Individual retirement account (IRA): Whether you’re slated to retire in five years or 30 years, an IRA is a great way to help you prepare. Tax rules vary depending on whether you choose a traditional or Roth IRA, but in either case, your money grows on a tax-deferred basis. IRA contributions are riskier than savings account deposits because they’re tied to the market, but their tax advantages make them a good long-term investment.

The takeaway

When choosing the right type of savings account for your needs, consider your goals, the amount of access to those funds that fits your needs and whether you want the highest APYs you can find or if visiting a bank in person is more important to you. Whichever savings account you choose, it’s a beneficial way to earn interest, avoid spending, and start saving for long-term goals or an emergency fund.

SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 3.80% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus .

New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Eligible Direct Deposit can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 3.80% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

6 types of savings accounts that can help grow your money