Top Eight Places to Stash Cash

By Dana Dratch

If you think you have a smaller savings cushion than you used to, you're not alone. Americans are saving less money now than at any time since the Great Depression. On average, consumers today are spending about 1 percent more than they earn, according to recent figures from the Bureau of Economic Analysis. And they are borrowing and dipping into their savings to do it.

The irony is that there are more savings vehicles with more convenience features than ever.

Find out which products are right for you:

1. Passbook Savings Accounts

Savings accounts operate much the same always. How much interest you earn depends on the institution, the balance, the balance in other accounts at that same institution and whether or not you have to maintain a minimum balance.

Who's It For?

Check out Bankrate's all-inclusive 2006 Savings Guide. Find inspiration, the best rates and more.

The ideal customer for the traditional savings account is someone who wants to save but realizes he could need that money instantly at any time.

Think young, cash-strapped and no safety net. As you save that recommended three-to-six-months' living expenses, you can also access it any time you have to pay medical bills, make emergency car repairs or replace the refrigerator.

It's also a good vehicle for older, more experienced consumers with special needs. Like the guy who just saved a bundle raising his insurance deductibles to $1,000. Now he parks $1,000 in an account he can raid at a moment's notice and he's covered.

Savings accounts can also act as a temporary parking spot for money you're accumulating to invest while you make more long-term strategy decisions. But, even in the best-case scenario, it's not the ideal place to leave large sums of money long term, because rates will usually just about cover inflation.

Pros

Very liquid: With a savings account, you can usually get your money as soon as you need it. If you have an online account, you might have to wait up to a couple of days.

Pays interest: Savings accounts typically reap some of the lowest interest levels among savings vehicles. But some institutions and online divisions of national banks are paying rates that rival CDs.

Easy to open: Institutions are making opening accounts easier than ever. Many accounts take very little money to open and some have a low (or no) minimum balance requirements.

Today's Average Savings Rates
Type	Current	APR
3 Month CD	0.87%	0.87%
6 Month CD	1.19%	1.19%
1 Yr CD	1.59%	1.60%
5 Yr CD	2.62%	2.66%
1 Yr Jumbo CD	1.64%	1.65%
MMA	1.08%	1.09%
$10K MMA	1.15%	1.16%
$25K IRA MMA	1.40%	1.40%
Jumbo IRA MMA	1.50%	1.51%
Interest Checking	0.59%	0.59%

Savings Accounts Data Provided by Bankrate.com

Compare Rates in Your Area

Convenient: You can open a savings account at virtually any institution. Many banks and credit unions also let you bank online or by phone.

The beauty of automation: Many institutions will let you set up automatic deposits to your savings account to make saving that much easier.

Funds insured: At an insured institution, your money is federally insured up to $100,000.

Cons

Low payoff: Usually not the highest interest rate available. While accounts pay some interest, you can typically earn more through other types of savings vehicles. But institutions are getting very competitive, so if interest is important, shop a little.

Easy access: These can be tempting for someone with no savings willpower. Because you can lay your hands on the money at any time, you could be tempted to drain the account for "wants," rather than "needs."

Restrictions: These could carry penalties or minimum balance requirements. Some savings accounts can carry penalties for not maintaining a certain minimum balance (anything from dropping the interest rate to assessing a fee.)

Unwanted tie-ins: Passbook savings accounts can sometimes be tied to checking accounts. Some institutions will tie your savings account to your checking account as a form of overdraft protection. But tell them that's not a service you want -- one impulse-shopping spree could wipe out all your good intentions.

Next: Money Market Accounts

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Compare Savings Products
	Cost to open	Min bal.	APY*	Insured	At risk	Investment choice	Liquidity
Passbook savings	minimal	usually none	.25 - 5.5	yes	no	no	complete
Money market acct	$1,000 - $50,000	yes	.15 - 5.6	no	no	no	liberal
Christmas /Club acct	minimal	usually 0	.5 - 5.5	yes	no	no	complete
MM mutual funds	$500 - $5,000	often	4.5 - 5.5	yes	no	yes	partial
CDs	$500 - $5,000	usually	.10 - 5.5	yes	no	no	with penalty
529 accounts	minimal	usually 0	n/a **	no	yes	yes	highly restricted
Savings bonds	approx $25	yes	EE bonds - 3.7 I-bonds - 2.41***	yes	no	no	restricted
Treasuries	minimum $1,000	yes	4.66 - 5.08	yes	no	no	restricted