June 20, 2023

This paid piece is sponsored by Central Bank.

When it comes to savings, 2023 is bringing uncharted territory for some – and a throwback experience for others.

Whether the days of CDs and money market accounts are tucked in your memory bank or an entirely new savings experience, it helps to familiarize yourself with a growing number of attractive options.

“If you have savings, you have options for growing it – definitely more than you have in years,” said Molly Jackson, branch manager for Central Bank in Sioux Falls.

“But there also are misconceptions about the products available, so we definitely encourage you to visit with an experienced banker to help find the best fit for you.”

Money market versus savings accounts – or one in the same?

Many consumers don’t fully understand how a money market account works, Jackson said.

“At Central Bank, a money market savings account and a savings account are interchangeable terms,” she said. “Both are FDIC-insured, and we have a large array of savings products with exceptionally competitive interest rates.” FDIC-insured deposits are covered up to $250,000.

Central Bank also recently introduced a high-yield savings account “that is compatible for a large range of savers,” she added.

When considering a money market or savings account, keep in mind that they are meant to encourage you to save. Minimum amounts might be required to establish an account or maintain a given interest rate.

When to open a CD

Certificates of deposit, or CDs, can be a great way to earn a higher fixed interest rate for a fixed period of time.

“These FDIC-insured products are safe and predictable,” Jackson said. “They’re best for someone who does not need direct access their money for a few months to a few years. However, their money is still available in case of an emergency, but usually there’s a small early withdrawal penalty.”

Business account options

Business owners also can take advantage of an adjusted approach to saving.

Money market accounts can be an excellent way to save money, especially when used in conjunction with a checking account, said Karen Waller, vice president business banker at Central Bank.

“Keep your operating funds in a checking account and your excess funds in the money market,” she said. “You may transfer the funds out of the money market into your checking account as needed, and the money market has tiers, so generally the higher your balance, the higher the interest rate.”

CDs can be an option for businesses too, she said.

“You will want to decide based on your projections, the timing of your revenue and expenses,” Waller said. “Only put funds into a CD that you know will be funds you won’t need to access during the time frame of the CD.”

A good strategy if you have short- and long-term cash needs is to open two or more CDs and stagger the maturity dates, she said.

“If you need to withdraw the funds early, there will be a penalty,” Waller said. “Always visit with your banker before you close a CD early.”

Central’s experienced team looks at business clients’ needs and goals to create a holistic approach to savings and cash flow, she added.

“You and your business are more than a transaction to us,” she said. “We look at the whole picture and will assist with all your banking, including deposit accounts, treasury services, loans, credit cards and other bank products.”

Longer-term approach

Despite the current advantages of various savings products, it’s still important to think long term. An individual retirement account, or IRA, is important to fund as an essential part of planning, Jackson said.

In addition to contributing to a retirement account your employer might sponsor, IRAs provide another way to save. They’re also a great option if you’re self-employed or don’t have an employer-sponsored plan.

“IRAs can have some tax benefits if used properly, though there are restrictions for qualifications and how much can be contributed per year, so check with your CPA,” Jackson said.

You also can roll over your past employer’s sponsored retirement plan to an IRA, she said, which is a nice option to consolidate retirement funds in one place.

“This has been a popular alternative lately, especially with the volatility of the stock market,” Jackson said. “With rising deposit rates, it is an attractive preference.”

In weighing your options, it’s important to work with the right banking team, she added.

“Central Bank has always been a strong lender in the Sioux Falls metro area, but we also have a large portfolio of deposit options,” Jackson said. “Our experienced staff is knowledgeable and ready to answer any questions. They live, volunteer and contribute to local communities and have insight into what will best favor your financial needs.”

To begin finding the savings approach that’s best for you, stop into any Central Bank branch or visit mycentral.bank.