There are many types of savings accounts available, and club accounts are not the only ones. If you’re comparing bank rates you’ll notice that there are several types of savings account rates that typically receiver higher rates than common accounts. They are sometimes referred to as passport or health savings accounts.
The following are two types of savings accounts that offer higher earnings and do not require a deposit term commitment:
Passport Savings Accounts
These accounts are like a cross between a checking and savings account, also referred to as flexible savings accounts. This is not to be confused with a flexible spending account, or FSA. A passport savings account combines the higher interest rate of savings accounts with the convenient features associated with checking accounts, like unlimited transactions and scheduled debit payments.
Health Savings Accounts
An HSA is a tax-favored account that is combined with a qualifying high-deductible health insurance plan. This is also similar to a health FSA, though the two are not the same thing. You can make pre-tax deposits (up to $6,150 for a family) as well as withdraw funds tax-free to pay for medical expenses. Unlike an FSA. the account has no set term or expiration and you could, in theory, never withdraw a dime.
So the next time you’re out searching for more ways to earn interest on your deposits, be a little more creative and ask about alternative savings account types. The difference between common savings accounts and specialized ones can be several percentage points which equates to more money in your pocket for free!
For more information on more complex savings account types, be sure to speak with your local banker or accountant about the details.
