A deposit account is simply an account where you can safely store money.
In this deposit account guide, we’ll look at various forms of deposit accounts, how to use them, and how they can help you reach your financial goals.
First, here’s a glossary of terms associated with deposit accounts:
Annual Percentage Yield (APY): The effective annual rate of return considering the effect of compounding interest.
Automated Teller Machine (ATM): A machine that allows bank or credit union customers to perform financial transactions, such as withdrawals and deposits, without needing a human teller.
Certificate Account: A savings certificate with a fixed maturity date and specified fixed interest rate. They are called Certificates at credit unions and Certificates of Deposit (CDs) at banks.
Checking Account: A deposit account designed for frequent transactions, such as deposits, withdrawals, and writing checks.
Compound Interest: Interest calculated on the initial principal, which also includes all the accumulated interest from previous periods on a deposit.
Debit Card: A card issued by a bank or credit union allowing the holder to transfer money electronically to another account when making a purchase.
Deposit Insurance: Federal protection that guarantees the safety of deposits up to a certain limit.
Direct Deposit: The electronic transfer of a payment directly from the account of the payer to the recipient’s account.
Dividend Rate: The declared rate paid on a deposit account at a credit union. This rate does not take into account the compounding of earnings within the year.
Money Market Account: A type of savings account that usually earns a higher amount of interest.
Overdraft: Occurs when money is withdrawn from a checking account, and the available balance goes below zero, often resulting in a fee.
Savings Account: A deposit account that earns interest and is used to hold money that is not intended for daily spending.
Term: The length of time a certificate account or other investment product lasts until it matures.
Withdrawal: The act of taking money out of an account.
What are some examples of deposit accounts?
The most basic type of deposit account is a savings account, which is designed to hold money you don’t need for daily expenses. You can use this account for short-term financial goals such as gifts, appliances and furniture, or school supplies.
[ View and compare savings options offered by Trailhead. ]
Another basic type of deposit account is a checking account. This is a transactional account that’s commonly used for daily expenses, paying bills, and direct deposit of paychecks. Checking accounts generally have no or low monthly fees, and they offer accessibility through ATM cards, debit cards, and checks.
[ View and compare checking options offered by Trailhead. ]
The best feature of a money market account is that it generally offers better rates than basic savings and checking accounts. Its easy accessibility makes a money market account a great place for an emergency fund, but you can also use it for a long-term goal like saving for a down payment on a home.
[ Learn more about the money market account offered by Trailhead. ]
A certificate account is a deposit account that has a fixed dividend rate for a specified term of a few months to several years. Because there are penalties for withdrawing funds before the term ends, a certificate might not be the best deposit account for an emergency fund. However, they are great for long-term savings goals such as retirement funds or education savings.
[ Learn more about certificate accounts offered by Trailhead. ]
Are my deposit accounts safe?
Credit unions are insured by the National Credit Union Administration (NCUA), and banks are insured by the Federal Deposit Insurance Corporation (FDIC).
Note: Your funds at Trailhead are insured up to $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), a division of the NCUA. The $250,000 in insured funds are per individual depositor, per ownership category. “Ownership category” refers to account type, usually single or joint. If you have a single and a joint account at Trailhead, both are insured up to the $250,000 limit. IRA accounts are insured separately up to $250,000.
Where’s the best place to get a deposit account?
Because of their not-for-profit structure, credit unions typically offer higher interest rates on deposit accounts compared to banks. Credit unions also offer lower, fewer or no fees for account maintenance and other services compared to banks. And don’t forget – at a credit union, you’re a member-owner rather than just a customer.
How do I choose the right deposit account?
- Assess your financial goals
- Do you need immediate access to your money?
- Can you leave it in an account to earn dividends?
- Compare account features
- Evaluate which account offers the best return for your savings.
- Compare any associated fees to find the most cost-effective option.
- Consider how often you need access to your funds.
- Consider future needs, such as buying a home, education expenses or retirement planning.
Make savings automatic
- Direct deposit – have your paycheck or government check deposited directly into your account.
- Automatic transfer – schedule regular transfers from checking to savings accounts to build your savings effortlessly and consistently.
Review your accounts regularly
- Monitor interest rates and fees – keep an eye on changes in interest rates and fee structures to ensure you’re getting the best value.
- Adjust as needed for your financial goals – reevaluate your accounts periodically to ensure they align with your evolving financial needs and goals.
[ Check out Trailhead’s rates and fees here. ]
Leverage additional services
- Online and mobile banking – use digital banking tools for easy account management and transaction monitoring.
- Financial planning tools – use financial calculators to enhance your financial planning efforts.
[ Learn more about Trailhead’s digital banking and financial calculators. ]
Use this deposit account information to guide your financial journey. Questions about Trailhead’s deposit accounts? Call 503-220-2592 or visit a branch today.
