While checking accounts are a common place to store money, many earn little to no interest. A traditional or high-yield savings account, money market account, or certificate of deposit (CD) could increase your savings, but knowing which is better for your long-term goals and needs is vital.

If you keep untouched money in your checking account for a rainy day, why not grow your savings through compound interest instead of letting it sit?

Your future self will thank you if you go beyond using your INPRS defined contribution (DC) account for your long-term needs. Building a robust savings is a wise decision for many reasons: retirement, emergencies, health, education — the list goes on. Your money could grow even more by depositing it into a traditional or high-yield savings account, money market account, or CD, to name just a few options.

Accounts that can grow your savings

The following accounts benefit from compounding, increasing your earnings through the interest that accumulates on top of your deposits.

INPRS DC

At least 3% of your gross covered wages are contributed to your DC by law. Your employer and plan type determine whether you or your employer pays this. If you make this contribution, it is made on a pre-tax basis through your payroll. You may also contribute up to 10% of your gross wages on a post-tax basis to increase your retirement savings.

Traditional or high-yield savings

You may need savings that can be accessed long before retirement. Traditional or high-yield savings accounts allow you to earn interest on the money you save, and you can quickly and easily access your money through transfers with your checking account or an ATM card.

Money market

Money market accounts are like checking accounts because you can access your money quickly. They also earn interest on deposits, like savings accounts. With generally more compound interest than traditional savings accounts, it might be worth comparing money market accounts with your bank's other savings options. This higher interest could also require higher minimum deposits and balance requirements.

Certificate of deposit (CD)

A CD could be an option if you have money you want to save but won’t need for a specified period. This typically ranges from a few months to several years. CDs generally grow more interest than savings or money market accounts. If money is withdrawn before the agreed-upon period, a penalty may be incurred, which is why CDs are better suited for long-term savings.

Other things to know

This list is not exhaustive, and many other options are available to help grow your savings funds, whether through your current bank, credit union, or another financial institution. Be sure to research account features for fees, minimum balance requirements, and interest rates. Another consideration is whether the account is FDIC-insured. Please consult your financial institution or advisor to discuss your savings goals.

This article is for educational purposes only. INPRS cannot provide you with financial advice. Discuss your circumstances and questions with a financial advisor.