Saving, paying off debt and investing are all important parts of a solid financial strategy. But what are your options? It starts with your goals.
I want to put my money in the bank
Traditional savings account
A basic deposit account where you can keep money you want to set aside rather than spend
- Good for short-term savings goals and emergency funds
- Provides easy way to add and withdraw money
- Tends to have lower interest rates
- Sometimes requires you to maintain a minimum balance
54% of American adults have more emergency savings than credit card debt—the highest since 2018.1
Consider if: You recently paid for an unexpected event, and your savings account could use a boost—or you have a short-term savings goal, like a vacation or a new appliance.
Certificate of deposit, or CD
An account designed for savings in which you agree to leave a fixed balance for a designated length of time in exchange for a fixed interest rate
- Low-risk way to grow funds
- Typically offers higher interest rates than traditional savings accounts
- Funds must be left for a designated term (can range from 1 month to 10 years, though typically 3 months to 5 years)
- Guarantees a fixed return—but you could miss out on higher earnings if rates change during your term
- Probable penalty if you withdraw funds before the end of the term
CDs are most common with single people who have no children and are older than 55.2
Consider if: You have a solid emergency fund or you're focusing on a longer-term goal and don't need to access this money for a while.
Bonus: You'll avoid the temptation to spend it if it's locked up for a time.
What APY are savers currently earning?
- 5%+: 7%
- 4%-4.99%: 15%
- 3%-3.99%: 10%
- 1%-2.99%: 22%
- Under 1%: 17%
- None: 17%
- Not sure: 11%
Consider if: You're focusing on a short-term goal. Because rates can change and longer-term returns can be lower than other investment options, these accounts aren’t always recommended for bigger savings goals like retirement.
Before you deposit money into a savings account, verify:
- The account is FDIC insured
- Any minimum deposit or balance requirement
- Any recurring fees
- Any transaction limits on deposits or withdrawals
- If your interest rate is fixed or variable
I want to pay down debt
Make extra payments on your mortgage, student loans, car payment or credit card bills
- Can increase your credit score
- May reduce the amount of interest you pay over the life of a loan
- Frees up your resources to eventually spend and save to meet financial goals
- Might limit your ability to address financial emergencies or add to short-term savings
Total consumer household debt (Q1 2024)3
- Housing: $12.82T
- Auto loan: $1.62T
- Student loan: $1.59T
- Credit card: $1.11T
- Other: $0.54T
Change from Q4 2023
- Housing: +$190B
- Auto loan: +$9B
- Student loan: -$6B
- Credit card: -$14B
- Other: -$11B
Consider if: You're close to paying off a debt, and an extra payment could help eliminate or reduce it—and your total interest.
I want to invest
Tax-advantaged options
Certain types of investment accounts—such as 401(k)s, IRAs, health savings accounts, or HSAs, and 529 plans—that encourage you to boost your long-term savings by offering tax benefits
- Good for building savings toward specific goals like retirement, healthcare or a child's education
- Depending on your financial situation and the timing of your goals, you may wish to prioritize one of two types of accounts:
- Tax-exempt: You pay taxes on your initial contributions, but your savings grow without additional taxes and withdrawals are tax-free
- Tax-deferred: You don't pay taxes on your contributions, but you pay taxes on future withdrawals
- Allows you to choose the most advantageous time to pay taxes on parts of your income, based on your earnings and tax brackets
Retirement savings account balances4
- Age: Under 25
- Average: $7,351
- Median: $2,816
- Age: 25-34
- Average: $37,557
- Median: $14,933
- Age: 35-44
- Average: $81,281
- Median: $35,537
- Age: 45-54
- Average: $168,646
- Median: $60,763
- Age: 55-64
- Average: $244,750
- Median: $87,571
- Age: 65+
- Average: $272,588
- Median: $88,488
Consider if: You want to earmark savings for things like retirement or health, or you think your tax bracket may change in the future.
Traditional investable assets
Types of investments like stocks—which allow you to put your money in company shares—or bonds—which let you loan money to companies or governments at fixed interest rates
- Plenty of trading options are available and accessible for casual investors
- Higher risk that stocks could decrease in value
- Bonds offer a fixed return, but often at lower rates and returns than stocks
- Must pay taxes on investment earnings annually
Percentage of people holding stocks in their portfolio, by age and average amount2
- Under 35: $12,000, 54%
- 35-44: $30,000, 64%
- 45-54: $68,650, 63%
- 55-64: $111,000, 59%
- 65-74: $160,000, 56%
- 75+: $119,500, 49%
Consider if: You have a higher risk tolerance—possibly because you have decades before you retire—or want to diversify your investment portfolio.
Sources:
1 54% of Americans Say They Have More Emergency Savings Than Credit Card Debt
2 Board of Governors of the Federal Reserve System: Survey of Consumer Finances, 1989-2022
3 Center for Microeconomic Data: Household Debt and Credit Report, Q2 2024
4 How America Saves Report 2024 (PDF)
