CD Rates & Account Saving Options : Save for Your Summer Family Vacation

Right now is actually an ideal time to start planning for your next family vacation. This is because you need to make wise decisions pertaining to finances… and planning a few months in advance is perhaps the best way to make sure you don’t lose track when the time comes.
The family vacation planning 2013 infographic published on MiniTime reveals that 4 out of 10 families start planning for vacations 3 to 6 months in advance. It also reveals that families take the road whenever possible and take the plane when it’s necessary. This is mostly due to budget restrictions, which can be avoided by saving up in advance.
The author of The Intersection of Joy and Money Mackey McNeill also warns that it’s not wise to use your credit card to pay travel expenses because you usually end up paying more than the total cost of the trip. When interest rates are taken into account, it can take a lot of time to pay off and the total cost is 50%, sometimes even 100% more.
So how can you make sure that your vacation goes ahead smoothly and you don’t deal with finance problems? 
The simple way is to start saving in advance, and perhaps the best option is to put your money in a savings account because you and your family members will end up with extra funds after maturity that can be used for travel expenses.
Some of the account options include:
1. CDs
 CDs help you to save more over a period of time. Recent Discover CD interest rates suggest that certificate of deposits are accompanied by higher interest rates than other savings options. You can open a CD account for a particular term with a range of a few months to a few years.
Because even the returns on the best CD interest rates can be wiped out if you withdraw before the maturity of the term, you should be motivated to stick to your savings plan. Some institutions also offer a guaranteed rate regardless of your maintained account balance, giving you the option to choose from short-term CDs and long-term CDs.
2. Checking accounts
You can also resort to credit unions, banks and saving associations for checking accounts. The main feature of these account is that you get flexible deposit and withdrawal options, and the money is insured by FDIC just like in a money market account.
The terms and conditions depend on the bank offering the checking account, so you can compare minimum fees, required balance and ATM limits before making a decision. Also, you can compare online banking options such as the ability to pay bills and make other transactions.
3. Money market accounts
A money market account has striking similarities to a regular savings account: you can deposit and withdraw money as well as earn an interest rate after keeping money for a certain period of time. However, in a money market account, you can earn a higher interest rate than a regular savings account, but typically less than what’s possible through high-yield CD rates.
You should also note that there is a withdrawal limit per month in this account and you need to maintain a high balance for avoiding fee charges (you do get to use a debit card without any fees). The interest rate changes based on the withdrawals you make and the institution where you have the account can stop paying interest when your balance falls below the set threshold.
4. Isas
Isas or a cash individual savings account is your route to earn tax-free interest, but there is a limit on the amount that can be deposited annually, which shouldn’t be a problem when you’re saving just for a few months.
Even though the interest rates are not as high as other accounts, the tax free income at the end beats many other types of saving accounts and therefore becomes suitable for short-term saving deposits.
5. Notice accounts

You are going to earn a better rate of interest when you agree to put your savings aside for a few months, and you may not be able to access this money instantly. Notice accounts only allow you to get cash after you give a notice of withdrawal.
For example, if your money is deposited in a 3-month notice account, you can only get it after 90 days and if you try to take it out early, there will be a heavy penalty charge, so this account can hold you back from spending before vacations. The decent interest rate will generate extra funds for your travels.

Image courtesy of cooldesigns | free digital photos

This article has been written by a guest poster for Serenity You

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