Dean has managed to save a significant amount of money for his daughter’s high school fees. He has planned to pay a lump sum to her school as soon as she starts, in order to cover the first three years of her schooling career. He is looking for an ideal place to keep the money stored before it comes into use.
His sister advises him to consider choosing banking deposits so that he avoids the temptation to spend the money on other needs. The various types of banking deposits available give him something to think about.
With this type of deposit, the rate of interest paid is unchanging. The money cannot be withdrawn before the tenure ends. Dean would do well to compare the fixed deposits offered by different financial institutions in order to benefit from the best interest rate.
While having this account is commendable, for a person interested in earning significant returns, it would not be ideal for Dean. It offers a safe way to store money with interest that keeps up with inflation. Minimum balances may be prescribed and the number of withdrawals may be restricted.
Money Market Accounts
This is regarded as a hybrid between a cheque and savings account. Money deposited earns interest.
Similar to a savings account, this option lets account owners conduct as many transactions as they want to. They can also withdraw money from the bank or an ATM. This type of account wouldn’t be ideal for Dean because it would make the money too easily accessible for him and the interest rates would not be so great either.