Types of Savings Accounts

Financial institutions have devised many types of saving accounts to meet the different needs of savers. Among these are passbook savings, NOWand money market accounts.

Acommon type of savings accounts among financial institutions is a regular savings account,which is sometimes called a passbook accountbecause depositors receive a book in which all account transactions are recorded. A second type of savings accounts is the negotiable order of withdrawal, or NOWaccount. NOWaccounts are offered at most commercial banks, savings banks,and loan associations across the nation. The holder of a NOW account can write checks on the amount deposited in the account and collect interest on the money remaining in the account. Another type of savings account that pays interest and allows easy access to the savings is a money market account. It offers variable interest ratesthat are usually higher than those of regular savings or NOW accounts. The interest paid by money market accounts is often linked to Treasury billsbecause financial institutions invest the money deposited in money market accounts in Treasure bills.

A savings account that requires the saver to leave money in the account for a specific amount of time is called a time deposit.

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