A free savings account is a financial product that enables you to deposit money and accrue interest without paying monthly maintenance fees. These accounts are free under certain conditions, like keeping minimum balances, setting up direct deposits, or having online banking only. Free savings accounts are a safe place to store money and pay modest returns in interest payments. Here are six types of free savings accounts:
1. Regular Savings Accounts
Standard financial products offered by most banking institutions are regular savings accounts. Most of these entry-level free savings accounts require a minimum opening deposit. Many banks will waive the monthly maintenance fee if you have a minimum daily balance or set up direct deposit. Regular savings accounts have fairly modest interest rates. Customers can access their money through various channels: ATMs, mobile apps, and in person. Basic features include FDIC insurance, automatic transfers, and withdrawals. Other banks offer relationship benefits for regular savings account holders who maintain combined balances. Traditional financial institutions may set limits on how much you can withdraw each month, usually capping the number at six transactions per statement cycle.
2. High-Yield Savings Accounts
Regular savings accounts have a paltry interest rate, while high-yield savings accounts (HYSAs) offer much better rates. These accounts are usually available without monthly maintenance fees from online-only banks. Typically, HYSAs come with strong digital banking tools, such as mobile check deposits, account alerts, and automatic savings plans. Most high-yield accounts maintain competitive rates by being virtual, reducing the costs of having physical branch locations. HYSA providers are also able to provide tiered interest rates, which increase as the balance rises. Unlike many other savings products, most high-yield savings accounts still receive FDIC insurance coverage.
3. Money Market Accounts
Money market accounts (MMAs) offer the interest-earning power of savings accounts with the check-writing capabilities of checking accounts. Typically, these hybrid accounts feature higher interest rates than traditional savings accounts. Many financial institutions offer tiered interest structures for MMAs, meaning you receive better rates with higher balances. Almost all money market accounts have convenient access tools, such as debit cards, checks, and online bill-pay access. Banks often waive monthly maintenance fees for account holders who maintain minimum balances. It is helpful for customers to know that MMAs are governed by federal Regulation D, which limits the number of transactions allowed per month. Money market accounts from traditional banks are accessed easily through their wider product ecosystems.
4. Certificate of Deposit Accounts
Certificate of deposit (CD) accounts hold your money for a term, such as several months, a year, or even several years. Banks offer higher interest rates for longer commitments. CDs are free savings vehicles, as most financial institutions do not charge monthly maintenance fees. Opening a CD account typically requires a minimum deposit. The early withdrawal penalties vary widely, from several months of interest on short-term CDs to half a year on longer terms. CD laddering strategies, offered by some financial institutions, enable customers to maximize returns while keeping periodic access to their funds.
5. Online Savings Accounts
Online savings accounts are managed solely via online platforms like websites, mobile apps, or electronic customer service. The interest rates for these accounts are usually higher than those of traditional banks. Most online banks eliminate monthly maintenance fees. Account opening is made simple by most online savings providers with streamlined digital applications. They offer customers the ability to manage their money through comprehensive mobile apps with tools such as automatic savings plans, goal tracking, and spending insights. Most online banks offer several ways to deposit funds, such as mobile check deposits, ACH transfers, direct deposits, and more. Online accounts have robust security measures, such as two-factor authentication, biometric login, and automatic logout features.
6. Cash Management Accounts
Cash management accounts (CMAs) are a blend of traditional banking products, such as checking, savings, and investment services, combined into one. Various financial technology companies provide CMAs at competitive interest rates. These hybrid accounts offer greater liquidity due to features like unlimited transactions, free ATM access, and check-writing capabilities. Most CMA providers don’t charge monthly fees, minimum balance requirements, or other bank charges. Cash management accounts often come with an investing platform. FDIC insurance protection is usually provided through partner banks to account holders, and the coverage may exceed the standard quarter-million-dollar limit.
Get Free Savings Accounts
Many free savings accounts are available, each designed to meet different financial needs with no monthly maintenance fee. Traditional products, such as regular savings accounts, come with basic functionality but wide accessibility, whereas high-yield and online accounts offer higher interest rates with digital-first models. Money market accounts and cash management accounts are hybrids of other types that offer enhanced liquidity. When deciding which account to select, consider the interest rate, accessibility requirements, fee structure, and other additional features. Contact a financial institution that can help you get a free savings account.