Cash management account. CMAs — offered by brokerages rather than banks — typically have decent interest rates and some checking features, such as a debit card and ATM access.
Where to store medium-term savings
Say you want to save for something that may take a year or more, like an emergency fund with three to six months of expenses, a large wedding or a down payment on a house. An account that keeps your money safe and separate and earns a little interest is the way to go. The interest rates on these products usually don’t surpass inflation, so they won’t be optimal for building wealth.
“Instead, use these savings vehicles to keep your money safe from your impulses,” said Christensen.
High-yield savings account. Like short-term savings goals, medium-term goals are also a good match for a high-yield savings account, since they are liquid.
CDs. If you know exactly when you’ll want to use your savings — say, to purchase a house two years from now — consider putting the funds into a CD that matures just ahead of that date, allowing you to earn a set amount of interest toward your financial goal. Keep in mind that most CDs charge a penalty if you withdraw your cash before the end of the CD’s term. If that’s a concern, you can also consider a no-penalty CD, offered at some banks.