A savings account is a type of financial account found at both banks and credit unions. These federally insured accounts typically pay interest, but often at lower rates than other interest-bearing financial products insured by the government, like certificates of deposit (CDs).

In exchange for lower rates, savings accounts offer more liquidity, allowing for up to six types of withdrawals or transfers per statement cycle (and potentially more). That makes savings accounts ideal for stashing money you may need access to if unexpected costs arise.

Savings accounts can play a crucial role in your financial health. Unlike a CD, which forces you to lock up your money for a specified period of time, there's no set term for maturity with a savings account. So, a savings account is a good spot to park your emergency fund. A CD isn't a good place for emergency savings since withdrawing your money before the CD term ends will likely result in a potentially costly fee.

Most consumers would benefit from having an emergency fund and additional savings. Most banks make it easy by allowing consumers to open multiple savings accounts for different savings goals.

A savings account should be a part of a diverse portfolio that could also include CDs for locking away money for longer terms, as well as the best investments to build your retirement nest egg. As a general rule, savings accounts are for money that you may need in the short term and that you don't want to expose to any risk that could cause you to lose principal. CDs are generally better suited for money that can be left untouched for one, three or five years, since CDs typically charge penalties for early withdrawals.

You’ll also want to make sure all of your savings accounts, money market accounts, checking accounts and CDs are at FDIC-insured banks, that your money is within FDIC limits and that you’re following the FDIC’s rules.

Some people may not be good candidates for savings accounts, including those who aren't able to maintain any minimum balance requirement that may result in fees. That said, some savings accounts at online FDIC-insured banks don’t have any minimum opening deposit requirements, minimum balance requirements or monthly service fees.

Here are a few categories of people who may benefit from opening a savings account:

• College savers: Saving for college is one of the biggest expenses parents face. Saving for students should be a marathon, not a sprint. An FDIC-insured savings account is a safe place to save for your child’s college education. Eventually, you might want to consider moving some money into a CD — depending on when your child is starting college.
• Future retirees: A savings account is one of the vehicles that should be used to prepare for retirement and should be a part of your retirement plan.
• Disciplined planners: It's critical to have an emergency savings account. This account should be able to cover at least six months' worth of expenses. You never know what the future will hold.
• Travelers: Planning a trip can be a fun part of traveling, and you can use your savings account to create a travel budget. Set up a recurring transfer from your checking account into your savings account so you don’t forget to save for your vacation.
• Future homeowners: A savings account at an FDIC-insured bank is the perfect place for your future downpayment on a home. Automate your savings to make sure you achieve your goal of homeownership.