Two types of accounts prevent you from accessing your money: savings accounts and CDs. A savings account doesn’t lock your money, but it restricts how often you withdraw each month.
A CD, on the other hand, locks you out of accessing your funds for a set period and, in exchange, offers high rates, which are also locked in at the time of opening. This makes CDs a particularly attractive option since they retain value even if federal interest rates drop.
Quick glance: Which accounts lock your funds away?
Among the many types of deposit and investment accounts, there are a handful that “lock” your funds away. With most locked accounts, withdrawing funds can mean penalties, or the account has monthly withdrawal restrictions.
Account type
Funds locked?
Certificates of deposit
Yes, interest-related penalties for early withdrawals.
Savings accounts
Sort of, often restricted to six withdrawals per month.
Club accounts
Yes, interest-related penalties for early withdrawals.
Money market account
Sort of, often restricted to six withdrawals per month.
Savings bonds
Yes, interest-related penalties for early withdrawals.
IRAs
Yes, additional tax penalty if withdrawals before age 59½.
Hard-to-access savings accounts
Unlike a CD, your money isn’t stuck for a set time with a savings or money market account. A savings account offers the benefit of compound interest while charging minimal or no fees. It also limits you from withdrawing your money to a certain number of times per month.
The Federal Reserve imposes a limit of six withdrawals per month on savings accounts through Regulation D. This means that if you withdraw money more than six times a month, your bank can prevent the withdrawal, charge you a fee — or even close your account. But not all savings accounts offer this limitation anymore after the suspension of Regulation D.
Compare savings accounts that limit you from withdrawing your money so that you can focus on growing your savings. To take it a step further, look for one that also doesn’t come with an ATM card.
What to look for in a savings account
Not all savings accounts are created equal. There are a few things to watch out for when signing up for a new account:
The interest rate. The higher the APY, the more you’ll earn. A high-yield savings account offers rates that are 10 times higher than the national average, which is currently at
0.38% APY.
How often interest is compounded. The more often interest is compounded, the more money you’ll earn. Most savings accounts compound daily.
Minimum balance amount. Banks often have a minimum amount required to open an account. Some accounts also have a minimum balance or tiered requirement you need to start earning interest or to achieve the highest APY.
Linked account requirements. Some banks also require you to open a linked checking account with them to open a savings account. If this is the case, make sure the checking account suits your needs and has no hidden fees.
Hidden account fees. Exorbitant bank fees can quickly defeat the purpose of any interest earned on an account, so read the fine print to make sure you’re aware of any ongoing fees, withdrawal fees or other transaction charges.
Accessibility. Although rare, some savings accounts come with an ATM card. If your goal is to keep your savings out of sight, choose one that doesn’t come with one.
Certificates of deposit
With a certificate of deposit (CD) your money is stuck for a set time of your choosing — usually anywhere from one month to five years — while it earns a fixed interest rate. It’s more restricting than a traditional savings account because you can’t access your money until the term is finished. If you need to make a withdrawal, you’ll need to give 31 days’ notice and pay a penalty.
A few key things to keep in mind before opening a CD:
Fixed rates. You get the security of a fixed interest rate and a guaranteed return on your investment. If interest rates drop while your money is locked away, your savings isn’t affected. However, if rates go up, you’re stuck with a lower yield.
Locks your money. You’re restricted from accessing your funds until it matures, so any money you deposit is safe from the risk of impulse buying and unnecessary spending. However, this makes it inconvenient if you need access to your funds in an emergency.
Can’t add money. Once you open and fund your CD, you can’t add money at any time like you would with a savings account. You’ll need to wait until your CD reaches maturity before you can contribute additional funds.
What to look for in a CD
Consider the following features when comparing the pros and cons of a CD account:
Strong rates. The best CDs on the market have rates as high as 5% APY or more. The national average, for comparison, is just
1.62% APY for 1-year CDs, according to the FDIC.
Compounding interest rate. Check how often interest is calculated on the account: daily, monthly, quarterly or yearly. The more often interest is calculated, the more your balance grows.
Term length. Consider how long you’re willing to lock your money away. Make sure you have a separate savings account that gives you easy access to your money in an emergency.
Early withdrawal fees. Check what fee you’ll incur if you need to withdraw your money before the term ends. Alternatively, you can take out a no-penalty CD to avoid these fees.
Where interest is paid. Is the interest you earn paid back into the same or different account? Do you need to open a linked account with the same financial institution to receive interest payments?
Loyalty bonuses. Some banks reward you with a bonus interest rate for reinvesting your money in another CD after your first deposit matures.
Any money you put into a traditional IRA account typically cannot be withdrawn without a penalty until you reach retirement age, and contributions are tax-deductible at both the federal and state level.
Accounts that restrict or limit you from accessing your savings are best for those who want to grow their money and remove the temptation to spend it all.
Before opening a CD, make sure you have money set aside in an easy-to-access account, like a savings or money market account, in case you need it for emergencies.
4 tips to put money away and not touch it
Here are a few quick tips to help you put away money and resist the temptation to withdraw it.
Separate your savings and checking funds. Simply keeping your savings in a separate bank account from your checking funds is a way to keep your savings out of sight, out of mind.
Get rid of the ATM card. If your savings account comes with an ATM card, don’t keep it in your wallet. Instead, hide it somewhere safe to make it more difficult to access and use.
Open an account with an online bank. Digital banks typically lack any physical branch location. This can make it more difficult to access your funds easily.
Lower your contributions. If you’re withdrawing from your savings often, you may be placing too much of your income into your savings account. Reduce your contribution percentage and see if that helps. For example, if you use the 50/30/20 rule, change your savings percentage from 20% to 15% or lower.
Reasons why people withdraw money from an emergency fund
While having money vaulted away is a great idea, it’s not always easy to do. Of those with an emergency fund, one-third (31%) said they had to dip into the account to take care of home repairs, while car repairs were a reality for a little over a quarter (26%).
Bottom Line
Both certificates of deposit and savings accounts help toward savings goals. If you might need access to your funds soon or want to add money each month, a savings account is a better option. But if you can commit to keeping your hands off your savings for a specified period, a CD helps you lock in your rate and money away from temptation.
Many savers use both options — when your savings account starts to get comfortably high, you can pull money out and put it into a CD. If you choose one with a high interest rate, you can sit back and watch your savings grow.
Steven Dashiell is an editor for Bankrate and CreditCards.com and formally a personal finance writer at Finder, specializing in credit cards, banking and growing and protecting your income. His insights and expertise has been featured on Nasdaq, U.S. News & World Report, Time, CBS, ABC, Fox Business, Lifehacker and Martha Stewart Living, among other top media. Steve holds a BA in English from University of Maryland, Baltimore County, minoring in composition and rhetoric. In his spare time Steve nerds out on birds, paints and plays a whole lot of Street Fighter. See full bio
Steven's expertise
Steven has written 46 Finder guides across topics including:
Compare some of the best high-yield savings accounts available.
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