Consequently, you may feel like you are becoming an adult since now you have some money, and you understand how to spend them. The financial institution gives you two variants: it can be a savings account or a Certificate of Deposit. Thus, the important thing to realize is that everything depends on the amount of time needed to spend this money.
Firstly, a savings account can be compared with sweatpants in the financial world. This kind of account can be convenient for you because of the flexibility of the operations you perform there. This means that you can easily withdraw or add your money to it. However, the interest rate at the savings account is quite low. Consequently, you can compare it with a parking place where your money are placed until you need them within the next few months.
In case of a CD, your money will be locked for some period of time depending on the type of the account: six months, one year, or five years. You will get more interest rates in comparison with savings accounts. The fee for breaking the agreement will be imposed by the bank in case you decide to take your money earlier than in the date of expiration of the certificate.
Thus, the only rule to remember is to count the expenses and look through the calendar. In case you plan to buy a car in two years, it is better to use the certificate of deposit.