65% of Americans are living paycheck to paycheck, and the personal savings rate was only 3.6 percent in April 2024, according to data from the Federal Reserve Bank of St. Louis.

If you’re trying to increase your personal savings, you may be wondering which type of account is best for you and your finances: savings, money market or certificate of deposit, also known as a CD.

Choosing the best savings account option comes down to knowing how these interest-bearing bank accounts operate as well as how they differ from one another.

Zions Bank Boise Main branch manager Ken Spencer shares insights on how each of these different accounts can help you meet your savings goal.

1. Savings Account

If you’re just starting to build an emergency fund and need money readily available, a savings account can be a great place to put your money.

“With a savings account, your funds are easily accessed with low minimum balance requirements,” said Spencer. “You’ll also benefit from FDIC insurance of up $250,000 per depositor.”

In exchange for this flexibility of having easy access to your money, savings accounts have a lower interest rate compared to money market accounts and CDs.

2. Money Market Savings Account

If you already have an established rainy-day fund and want to earn a better interest rate than a traditional savings account, a money market savings account could be a better savings account option.

A money market account is a type of savings account that is also FDIC insured up to $250,000. You can typically write checks or access funds with a debit card, while still obtaining a higher interest rate than a standard savings account. In exchange for a higher interest rate, money market savings accounts have a few considerations to understand.

“Money market accounts usually require a higher opening balance and a higher minimum balance than a standard savings account,” explains Spencer. “Additionally, some market money accounts may limit the number of monthly withdrawals and transfers.”

3. Certificates of Deposit

If you don’t need immediate access to your funds to cover financial emergencies, CDs can be a powerful savings tool because they typically pay the highest interest rate compared to savings and money market accounts.

When you open a CD, you choose how much money to deposit and how long you want to keep the money there. The length of a CD might be anywhere from a few months to five years or more, with varied interest rates for each length. CDs are FDIC insured up to $250,000.

With a CD it’s important to know that you will incur a penalty fee if you withdraw funds before the CD matures — which is when the fixed term ends. In compensation for this lack of flexibility, banks frequently offer greater interest rates on CDs than on other types of accounts.

For most CDs the interest rate is locked until maturity, regardless of interest rate increases. This makes it crucial to take your liquidity demands into account when selecting a CD term and to remember that interest rates fluctuate over time.

“When interest rates are high, savers have many opportunities to put money aside for a rainy day,” said Spencer. “As you consider your options, our bankers can help you evaluate your personal financial situation and identify the right way to help grow your savings.”

Zions Bank offers a wide variety of savings account options, including money market accounts, savings accounts and certificates of deposit. Visit the Zions Bank website to compare savings accounts or visit with a banker at a Zions Bank branch to learn more about your savings account options.