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If you need a secure place to store your hard-earned cash and want to grow your nest egg, an interest-bearing savings account might be the right choice for you. These special savings accounts allow you to save more money by earning it through interest on deposited funds. 

Banks offer several different varieties of interest-bearing accounts – so how do you pick the right one for you? 

If you have questions, such as, “What’s the difference between an interest-bearing account and a regular savings account?” “What does APY mean?” “What is a CD account?” “What is a Money Market Account?” We’re here to help. 

Below, we’ll help you understand what interest-bearing accounts are and how they can work to earn more on your hard-earned money. We’ll also walk you through what APY means and teach you how to use an APY calculator to forecast maximum savings.

First, an interest-bearing account is an account at a bank or financial institution that earns interest over a specific period of time. And, unlike stocks and exchange-traded funds, your account balance isn’t vulnerable to the ups and downs of the market. This provides an extra level of security for those wanting to preserve their nest egg. 

Most banks offer several different interest-bearing accounts to help you save money effectively – the most common of which is a standard savings account. This is a great choice if you want a starter account with a low deposit and tiered interest rates. If you want to plan for your future, you can find our savings calculator here.

Your bank likely also offers a Money Market Savings account, which requires a larger initial deposit but also delivers higher interest. They’re high-yield but still function like a regular savings account, which allows you to earn interest based on your account balance while still granting unrestricted access to your funds. In a Money Market Account, interest is earned daily and credited to the account monthly. 

The third type of interest-bearing account has a familiar acronym: it’s called a CD – but it doesn’t stand for “compact disc.” So, what is a CD? In this case, CD means Certificate of Deposit, a special, high-yield account that can pack a punch when it comes to saving for the future. 

These accounts require a large initial deposit – anywhere from $1,000 and up – and restrict account access for a particular period of time. However, they also offer higher interest rates than many other savings options, so are among some of the best ways to save money. In a CD, interest accrues daily and is credited monthly. 

The terms and restrictions vary from bank to bank and from tier to tier, so be sure to visit one of our banking centers and ask about a Certificate of Deposit – examples can be found on our website. 

So how does Annual Percentage Yield, or APY, fit into this? APY is the amount of interest that can be earned on an account on an annual basis and is used to calculate the return on interest-bearing accounts. In other words, it’s the interest your deposited funds earn within a calendar year. 

APY takes into account compounding interest, allowing you to maximize your savings. Over time, this can add up to a significant amount – which is one reason financial experts recommend you try to avoid dipping into your savings.

APY varies by account type, bank and other variables, so be sure to check out our handy APY calculator  – also known as a savings interest calculator, a savings goal calculator or a retirement savings calculator – to learn more about how to accurately forecast your potential savings. 

If you’re interested in learning more about interest-bearing accounts, APY, or how to save money for retirement or other life goals, give us a call at 1.800.205.3464 or visit one of our banking centers.