Finance

Which Type of Bank Account Has the Highest Interest Rate?

Earning money, becoming rich, buying whatever we want, going wherever we want and doing whatever we want, are some of our childhood dreams. For most people, no matter what kind of career path they are on, money is a very important aspect. Some people work 80 hours a week to earn the money that they want, in order to support themselves and their families, ensuring a life of relative comfort and luxury in the process. However, earning and spending aren’t the only activities associated with money. One of the most important activities while dealing with money, is saving it. Since the future can not be predicted by anyone, it’s important to be prepared for every eventuality. Saving a portion of your hard earned money secures your and your family’s future and helps you survive during worst case scenarios. If you have saved enough money, you won’t go into debt in the times of crisis. However, even though we might have an understanding about the benefits of saving money, figuring out where to save it isn’t always easy. Figuring out which type of bank account has the highest interest is often the hardest part of getting started.

When it comes to finding out what type of bank account has the highest interest rate, three different types of account can be considered. Aside from opening a bank account with the highest interest rate, you should also consider the purpose of opening the account. Among the bank accounts with highest interest rates, the most popular ones are checking accounts, savings accounts and certificates of deposit. While selecting the type of bank account for yourself, make sure that it gives you the highest possible interest while also serving your saving style and financial goals.

Types of Bank Accounts

While you are looking for opening a bank account with the highest interest, or just looking to safely preserve your short term savings, one of these three types of accounts should serve your purpose:

Checking Accounts

When easy and frequent access to your money, aside from getting a bank account with the highest interest rare, is your goal, a checking account will serve your purpose in the best possible manner. You can utilize your checking account to pay for goods and services by writing a cheque against your account. Your checking account will also come with features such as debit cards and online account management.

Checking accounts also have very low account maintenance charges and come with a widespread network of ATMs providing instant access to your cash. However, the versatility and ease of access comes at a price, as far as bank accounts with highest interest rates go, a checking account comes in at the bottom. So if you are not really interested in its features and mainly want to grow your money with a bank account which offers a really high interest rate, check out the options mentioned below.

Savings Account

This account is similar to a checking account, however it doesn’t offer a checking component. Accessing your account is simple and you can use ATMs or online account management tools for it. However, unlike a checking account, the number of times you can withdraw cash/transfer funds from a savings account is limited in a month.

However, when it comes to finding the bank account with the highest interest rate, a savings account is a very strong contender. It also offers low maintenance fees and minimum deposit requirements. If you are confused by all the information surrounding bank accounts with highest interest rates, you can just choose a good old savings account and watch your money grow at a steady pace over time.

Certificate of Deposit

As far as bank accounts with highest interest rates go, nothing can really match the rates offered by Certificates of Deposit (CD). However, aside from being the bank account with the highest interest rate, Certificate of Deposit has a big drawback. It doesn’t provide you with an access to your money for a long period of time. Unlike the ease of access of checking and savings accounts, your money is tied up with the bank for a very long time.

A certificate of deposits term can vary from three months to 10 years. The interest rate for your account will vary as per your term. Generally, the longer the term, the higher the interest rate for your bank account. During the term, your rate of interest will be fixed and you can generate a good amount of return with a Certificate of Deposit. So it is the clear winner in the competition for the type of bank account with the highest interest rate.

In case you want to withdraw your money before the term expires, you will have to pay a certain amount of money as penalty. However, all that aside, Certificate of Deposit isn’t just a type of bank account which gives you the highest interest rate, it also gives the highest interest rate among all low risk investment tools.

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