By: Elaine Day
August 24, 2023
In the current financial environment, you’ve likely seen a variety of rate promotions for different account types, and you may be wondering the best way to make these promotions work for your financial goals. If so, this blog post is for you. Below, I—First Carolina Bank’s Corporate Marketing and Communications Advisor—will draw on my branch banking background to break down the nuances of each type of account.
One thing to note before we jump into the accounts themselves is that at First Carolina Bank, we compound interest daily and credit it to your account monthly for money market and CD accounts and quarterly for savings accounts. You can see the interest build each day in your online banking as well as the amount paid out year-to-date. This is an easier way to track your interest rather than trying to manually calculate it, as those kinds of calculations can get complicated when accounting for the interest credited.
TRADITIONAL SAVINGS ACCOUNT
When you think of your typical savings account, this is the product you’re envisioning, and it’s perfect for those who are just starting a savings journey and don’t have as much money to put into the account. It has a lower minimum balance requirement and will have the lowest variable interest rate of the accounts listed in this post as a result, and since it is a savings account, you are limited in the amount of transfers or withdrawals you can make—no more than six per statement cycle, which is quarterly at First Carolina Bank. That limit will help hold you accountable to keeping the money in your rainy day fund!
There is also a minor savings option for children starting at birth through age 17. The minor can be listed on the account, so it’s a great way to introduce them to banking and savings.
MONEY MARKET ACCOUNT
If you have a little more money saved up, want to earn a higher interest rate, and need the funds to be accessible, a money market account is the route for you. At First Carolina, our standard product in this category is our Carolina Money Market, and the rate is tiered and variable based on the balance in your account. From time to time, we will also run rate specials, and you will be placed in a resulting special money market product for back-end tracking and maintenance purposes.
Like the traditional savings account, the limit of six transfers or withdrawals per statement cycle applies, though our statement cycle is monthly for money market accounts, so you have a bit more flexibility. Should you exceed this number, an excessive transaction fee may apply, or your account may be converted to a checking product. But, the higher the balance in the account, the higher the interest rate, so these limitations work for your benefit!
CERTIFICATE OF DEPOSIT
A Certificate of Deposit, more commonly known as a CD, is a time deposit product. This means that you are agreeing to lock away your deposit—our minimum for CDs is $5,000—for a set amount of time, and you will earn a fixed interest rate for the entire duration. The rate is typically higher than other interest-bearing products due to the guaranteed timeframe, which can range from a few months to a few years. In the event that you need to access the funds before the CD duration concludes, or matures, you will be assessed an early withdrawal penalty—so, if there is any doubt regarding your need for the funds, a money market might be better for you.
When the CD matures, you can either receive a cashier’s check with the initial deposit amount plus the interest accrued, transfer the funds into another kind of account, or you can roll the entire balance into a new CD at the then-standard rate we are offering at that time.
ICS & CDARS
If you’re looking to deposit and earn interest on larger sums of money, we offer ICS and CDARS products to make sure those funds are covered by the FDIC. ICS stands for IntraFi Cash Service, and CDARS is short for Certificate of Deposit Account Registry Service. These services provide FDIC insurance on deposits greater than $250,000. Your funds are divided into deposits below that threshold at multiple FDIC-insured institutions, but you receive all account support through your First Carolina Bank bankers. Additionally, the interest rates for these accounts are set by us and not another institution.
ICS places your funds into demand deposit and money market accounts, while CDARS is a CD-based product. So, as discussed in above sections, if you’d like more consistent access to the money, ICS is the right route, but if you’re comfortable setting it aside for a longer period of time, CDARS is a great option.
If you’re still unsure where to start, let your local bankers help you! Our team is more than happy to talk through these options as part of a greater discussion about your current financial situation and future goals. Happy saving!