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You’ve heard of checking accounts. But banks have more to offer you than just those. In fact, there are accounts out there that can work even harder.
Get ready to put on your super-shocked Andy Dwyer face, because we're about to rock your financial world with leads on five bank accounts that are super-smart to have, and, with so many options out there, super-easy to have missed out on.
Money market accounts: Like checking, but for us
You're a person with needs. Three needs, to be specific. One, you want to sock away cash. Two, you want to sock away cash and get paid interest. Three, you want to write a check every now and then because, hey, even in the 21st century, most landlords only accept paper.
Dude. Forget the checking account. You're a person who needs a Money Market Account, or MMA. At most banks, you'll get an interest rate that's competitive with, if not the same as, what's offered on their savings accounts. Plus, if you do the legwork, you can find an MMA that gives you a debit card, as well as the ability to write a modest number of monthly checks (like, maybe six). One note: Interest-triggering, minimum-balance requirements can vary greatly, from $0 to $10,000 to more. So, once again: Shop. Around.
Checking accounts with actual rewards
If your checking account is netting you nothing but a monthly fee, then you need to switch things up.
Rewards checking lives up to its name by offering, yes, rewards. Maybe it's cash back on purchases, a la Discover's Cashback Checking. Maybe it's airline miles, a la UFB Direct's Airline Rewards Checking. Or maybe it's a killer interest rate offered by any number of banks' and credit unions' high-yield checking accounts.
We should point out that the sky's not the limit with most rewards checking programs. Discover's 1 percent cash-back perk, for example, is only paid out on the first $3,000 of monthly debit-card buys, while high-yield checking accounts, for another example, often limit how much balance you can carry.
There's a lot to unpack on this one, so let's start here: If you didn't know you needed a retirement account, then here's your reminder: You need a retirement account.
If you've got a gig with an employer-backed 401(k) plan, then congrats, but the money folks say you should still consider opening an Individual Retirement Account, or IRA. IRAs not only help save for your future, but also help you win at your taxes.
If you've already got an IRA, then you've probably got a traditional IRA. With it, you kick in as much as $5,500 annually (if you're under age 50), and then, depending on your filing status and work-retirement plan, claim up to all of that contribution as a deduction on your federal income taxes. Uncle Sam takes his on the the back end when you retire.
The other kind of IRA, the Roth IRA, is less sexy in that you don't get the immediate tax break -- you pay taxes every year on your annual contribution. But because you've been paying as you go, by the time you've decided to go parasailing into the sunset, you're paid up. No taxes when you start to use that sweet, sweet, old-person money.
If you're age 59-and-a-half or older, and you've had your Roth IRA for at least five years, then you can withdraw your entire nest egg without taxes and without penalties. And, no, it's never too soon to start figuring all this stuff out: Financial advisors recommend even teenagers with summer jobs open Roth IRAs.
No-penalty CD: The CD that doesn’t judge you
Like regular CDs, the no-penalty version locks in your money at a higher-than-standard-savings-account interest rate for a set period of time -- as in the case of both Ally's and CIT's, 11 months. (CIT, by the by, requires a minimum-opening deposit of $1,000; Ally doesn't require one at all.) Just put your money in, wait 11 months, and get more money in the end.
But! While the traditional CD punishes you for an early withdrawal, the no-penalty CD doesn't. If you have a sudden, urgent desire to withdraw some or all of your money after about, say, three months, you're cool. You don’t lose any money. The one big rule both the Ally and CIT accounts have is that you can't make any withdrawals in the first six days.
ANY kind of savings account
Seriously, right? You need a savings account, any savings account, because you need savings. Cars break down, layoffs happen, appendixes burst. In short: Things happen.
A 2017 survey showed that 39 percent of Americans had nothing, nada, zip saved. That's a lot of folks financially unprepared for things happening. Don't be one of them. Get started, if need be, with the most basic, no-fee, no-minimum-balance, no-frills savings account. Those are easier to find than you might think, too.