Type of Account

Advantages

Drawbacks

Regular savings

• Liquidity

• FDIC insured

• Potential minimum balance requirement to earn interest or avoid fee

Money market account

• Liquidity

• Higher interest rate, especially on larger balances

• FDIC insured

• Minimum balance requirement to earn higher interest rate

• Potentially higher fees for low balances

Certificate of deposit (CDs)

• Higher interest rate than other bank products

• Variety of terms available

• FDIC insured

• Potential loss of interest on premature withdrawals

Money market mutual fund

• Liquidity

• Higher interest rate than on regular savings

• Not FDIC insured

• Minimum balance may be required to avoid fees