Match your savings to when you’ll need it.

Once you start saving, a new question shows up: where should the money live? There are a lot of options, and the names can sound alike. A money market account and a money market fund, for example, are very different things.

The good news is that you don’t need to find the perfect account. You need one that keeps your money safe and lets you reach it when you need it. The easiest way to choose is to start with a simple question: when will you need this money?

Start with your timeline

Sort your savings into rough groups:

• Any day now. Your emergency fund and money for near-term bills.
• Within a year or two. A planned purchase, a move or a trip.
• A few years out. A down payment or another larger goal.

Money you might need any day should be easy to withdraw without a penalty. Money with a known date can often go somewhere that pays a bit more in exchange for less flexibility.

Bank and credit union accounts

Savings accounts, including “high-yield” ones

A savings account is a deposit account at a bank or credit union. You can usually move money in and out easily. Some accounts are marketed as “high-yield,” meaning they pay more interest than typical savings accounts. That’s a sales label, not a separate kind of account. It’s still a savings account, and it’s covered by deposit insurance when the institution is federally insured.

Savings accounts work well for emergency funds and money you’ll need soon.

Money market accounts

A money market account is a deposit account offered by banks and credit unions. According to the Consumer Financial Protection Bureau (CFPB), these accounts tend to pay more interest than other savings accounts. They may limit how many checks, debit card payments or electronic transfers you can make, and some require a minimum balance. Like other deposit accounts, they’re federally insured up to the limits described below.

Certificates of deposit

A certificate of deposit (CD) holds a fixed amount of money for a fixed period, such as six months, one year or five years. In exchange, the bank pays interest. When the CD reaches its end date, called maturity, you get your money back plus interest.

The catch is access. CDs often charge a penalty if you take money out before maturity. The disclosure should spell out the rate, the maturity date and any early-withdrawal penalty, so read it before you commit. CDs fit money you’re confident you won’t need until a set date.

Money market funds are different

A money market fund is a type of mutual fund. It’s an investment, not a deposit account, even if you buy it through a bank. Deposit insurance from the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) doesn’t cover mutual funds or other non-deposit investments.

If you see “money market” in an account name, check whether it’s a deposit account or a fund before you decide.

Treasury bills and I bonds, briefly

The U.S. Treasury also sells options some savers use:

• Treasury bills (T-bills) have terms from four weeks to 52 weeks. You pay a price at or below face value and receive the face value when the bill matures. You can hold a bill until it matures or sell it before then.
• Series I savings bonds (I bonds) earn a rate that combines a fixed rate with an inflation rate that resets every six months. You can’t cash one in for the first 12 months. If you cash it in before five years, you lose the last three months of interest. There’s an annual purchase limit, which you can check at TreasuryDirect.gov.

Treasury securities aren’t deposits, so FDIC insurance doesn’t apply to them. Because of the one-year lockup, I bonds don’t suit money you might need soon. If you’re weighing these options against your wider finances or taxes, a qualified professional can help.

How deposit insurance works

The FDIC insures deposits at member banks. The standard coverage is $250,000 per depositor, per FDIC-insured bank, for each account ownership category. Ownership categories include single accounts, joint accounts and certain retirement accounts. Covered deposits include checking, savings, money market deposit accounts and CDs.

Credit unions have similar coverage through the NCUA. If your savings are near these limits, ask your bank or credit union how your accounts are insured.

Your next step

Pick one pot of money you already have saved. Write down when you expect to need it. Then check that its account fits that timeline and is at a federally insured bank or credit union.