Your wedding may focus on love and commitment, but you’re going to need some cold hard cash to make your celebration happen. Fortunately, you don’t have to rely on debt financing to fund your big day. With many types of deposit account options and other savings vehicles on the market, you’ve got several options to help you put away the money you need.
Classic Savings Accounts
Writing for NerdWallet, banking expert Tony Armstrong explains how traditional savings accounts work. Simply put, they’re vehicles into which you can deposit money that periodically earns a small amount of interest. They allow you to segregate funds that you don’t want to spend right now yet still permit you to make a minimal number of withdrawals or transfers. Federal law provides for up to six per month before your institution charges any fees.
Currently, most savings accounts yield around 2 percent annual percentage yields, or APYs. The Balance spells out how APYs work, accounting for compounding interest instead of simple interest. Compounding occurs in a somewhat straightforward process:
- You open a new account and make an initial deposit.
- Your original deposit earns interest.
- The bank adds the new interest to your starting deposit.
- During the next period, you earn more interest on the new total account balance.
The Balance also mentions online savings accounts. These financial vehicles tend to yield more interest, have no minimum balance requirements, and charge low or no fees. Online banks and some brick-and-mortar institutions offer these types of accounts. Although many of these are self-service focused, you can still contact customer support if you need assistance. Also, you can take advantage of perks such as remote virtual deposit and online management tools through the bank’s website or app.
Certificates of Deposit
Investopedia breaks down the workings behind certificates of deposit, otherwise called CDs. They’re savings certificates that come with fixed maturity dates, requiring you to keep your money invested for a certain period of time. Maturity rates on CDs range between three months and five years, during which you’d incur an early withdrawal penalty if you attempt to cash them in. Because of this, CDs can help you stash away funds and curb impulsive spending. Be sure to check each bank’s minimum deposit requirements and APYs, which are often comparable to regular savings accounts.
Money Market Accounts
The Simple Dollar’s Saundra Latham clarifies how money market accounts function. They behave a little like hybrids between checking and savings accounts, but that’s a simplistic description. MMAs typically earn more interest than standard checking or savings accounts, but not as much as CDs. Moreover, your institution will allow you to write a limited number of checks each month. When considering your options, keep in mind that MMAs mandate a minimum balance and permit only six withdrawals per month.
What About “Loose Change” Investment Apps?
Micro-investment apps allow users to save their “spare change” by depositing it into investment accounts. Some popular choices include Acorns, Stash, and Clink. Money Under 30’s Choncé Maddox discusses these apps, which round up debit card purchases to the nearest dollar and invest the excess. These can provide an easy entry point to begin investing, with their low minimum deposits and small fees. However, fees can eat up some of your investment earnings. Investors with balances over $5,000 tend to feel a bigger pinch as fees cut into their contributions.
Consider Your Savings Approaches
Ally Bank supplies some wedding savings tips. Its experts suggest that readers determine a budget, open an online savings account, and set up automatic deposits. These basic steps can work for most types of savings vehicles, but you’ll ultimately need to figure out approaches that are right for you.