Places to Save Your Extra Money

Extra money is one of the best problems there is to have — but it can still present some challenges. If you’ve recently happened into a windfall, you may be wondering where to stash that extra cash.

From checking accounts to savings accounts to the stock market and everything in between, you’ve got options when it comes to figuring out where to put your money. Here’s some food for thought.

Where should I put my money?

The answer to this question, as with so many financial considerations, is: it depends. How much extra money are we talking about? What are your immediate, short-term, and long-term financial goals — and where are you on the journey to achieving them? Sitting down to get familiar with your monthly budgeting and creating an overarching savings plan can help you figure out which steps to take next.

There are a few basic personal finance rules of thumb that are applicable to a lot of savers, though. For example, if you don’t already have an emergency fund — ideally of at least three months’ worth of living expenses — setting some money aside for that purpose is probably a good idea. Make sure to keep this cash in a place where it’s easily accessed , which is to say, probably in a checking or savings account..

Speaking of checking and savings accounts

Do I need a checking or savings account?

Some customers want both! 

A checking account may be a great place to keep cash you access regularly to use for bills, groceries, credit card payments and all the other daily living expenses we all face. Checking accounts, unlike savings accounts, generally come with an attached debit card with which to make point-of-sale transactions.

A savings account, on the other hand, may be a good place to squirrel away money for a future use (or those emergency savings we were talking about), especially since you may be limited to only a certain number of withdrawals from a savings account per month.

Generally, savings accounts may be a great place to save money because they feature higher interest rates than checking accounts — which often don’t earn interest at all. While the interest you can generate in even a high-yield savings account may be far lower than what you might earn by other means, an FDIC-insured1 (or NCUA-insured2, if it’s a credit union) savings account may be less risky.

What’s the difference between savings and money market accounts?

Depending what bank you work with, you may have access to either a savings account or a money market account (or both). While both of these deposit accounts may earn interest, and both generally may have more limitations than regular checking accounts, there are a few differences to note.

For starters, even high-yield savings accounts often have a specific maximum available interest rate — and you may have to meet certain requirements (such as maintaining a minimum balance or depositing a certain amount each month) to get that rate. Money market accounts, on the other hand, offer variable rates, which rise and fall with inflation and other factors. So while you may have the potential for better rates on the money market, there’s also a possibility that those rates will fall. 

At the time of this writing, the average rate of return for saving accounts is 0.06% APY vs 0.08% APY for money market accounts, per the FDIC3 — so again., if you’re really looking for exponential growth, you may be more likely to find it through an investment account at a brokerage or your retirement savings.

However, unlike the stock market, Funds placed into an eligible money market deposit account are generally FDIC insured (always check with your specific financial institution). A money market mutual fund, on the other hand, is not — so don’t get these two products mixed up! 

What are certificates of deposit (CDs)?

A good option for long-term savings goals may be certificate of deposit, or CD, which is different from a savings product because it offers a fixed interest rate in exchange for leaving your money in the account for a set period of time. Generally, the longer the money goes untouched, the higher the interest rate.

Additionally, you may be subject to fees and penalties if you need to do an early withdrawal, so use a CD for money you know you won’t need access to for a while.

While your banking options are virtually limitless, Quontic offers a wide range of FDIC-insured1deposit accounts and savings products that may help you meet your financial goals while earning rewards like cash back at the same time. Our online savings account features low minimum deposits and no monthly maintenance fees — and we’re standing by to answer any questions you might have.

Footnotes:

1FDIC insurance is applicable to eligible deposit accounts and up to the maximum allowed by law . Learn more at https://www.fdic.gov/resources/deposit-insurance/financial-products-insured/index.html.

2Learn more about NCUA insured accounts, which are applicable to eligible account and up to the maximum allowed. https://www.mycreditunion.gov/share-insurance

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