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How to Choose a Savings Vehicle for Your Goals

January 31, 2023
Paula Duplantis
Paula Duplantis

Savings goals can range from a few hundred dollars for a special gift to thousands of dollars for a down payment on your first home. While following a well-developed savings plan is a vital part of reaching your goals, another factor is selecting the appropriate savings vehicle to complement your efforts.

A savings vehicle is simply any account used to save and store your hard-earned money. Three of the most common savings vehicles are savings accounts, money market accounts and certificates of deposit (CDs), each with their own benefits.


How to Choose a Savings Vehicle for Your Goals


When considering which vehicle is best for your situation, consider these questions.


1. How much do you currently have saved and what is your savings goal?

If you are in the early stages of your savings journey and plan to continue adding funds to your savings vehicle over time, you may want to consider a traditional savings account or a money market account. These two vehicles make it easy to build your savings through deposits and automatic transfers for an unlimited amount of time.

If you currently have all of the funds that meet your savings goal and need a place to store your money for a set amount of time and allow it to earn interest, a CD may make the most sense. When opening a CD, you deposit a fixed amount for the duration of the term, without the option to add more until maturity. One great feature of a CD is that once you lock in an interest rate, you are guaranteed to earn that interest during the full term, even if there is a federal rate cut.


2. How far away is your goal?

The amount of time between when you select your savings vehicle and when you’ll need access to the funds will impact the type of vehicle you choose.

Short-term savings goals may be best suited for savings account or money market accounts. If your savings plan timeline is shorter than two years, you may not reap the benefits of a CD. With a savings account or money market account, you can be certain your money is available when you need it.

Medium- to long-term goals align better with CDs. You can match the term of the CD with the timeframe in which you will need the funds and shop around for the rate that maximizes your efforts. CD terms, or the length of time your money stays in a CD, can range from as little as 28 or 30 days up to 10 years or more.1


3. How accessible should your funds be?

Certain accounts require you to leave your money for a set amount of time before you can access it, or you run the risk of a penalty for an early withdrawal. If you’re saving for a future purchase such as a home or a car that has a set timeframe in the future, a CD is a good way to grow your funds because in exchange for inaccessible funds for a set period of time, banks tend to offer higher interest rates on CDs. If you do tap into your CD savings early, you may incur a penalties.1

If having easier access to your funds for the unexpected is important to you, a money market or savings account ensures you can get to your money when you need it. Money market accounts are generally the more flexible option to manage your money with transactional features like the ability to write checks directly from your account. Money market accounts may come with higher balance requirements and monthly fees.2

A savings strategy is a key piece of building a strong financial future and by better understanding what account is best suited to help you reach your goals you can achieve your goals even quicker.


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1 “Pros and Cons of using a Certificate of Deposit (CD) For Your Savings”, July 31, 2022, https://www.forbes.com/advisor/banking/pros-and-cons-of-using-a-certificate-of-deposit-cd-for-your-savings/

2 “ The Pros and Cons of Money Market Accounts”, November 17, 2022, https://www.forbes.com/advisor/banking/pros-and-cons-of-money-market-accounts/


The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

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