Savings accounts can be used for both short term and long term savings goals, although you may need to have more than one account in order to benefit most from interest rates and account features. Before shopping for a savings account, it’s important that you consider how often you’ll need to access the money in the account.

Certificate of Deposit: If you can commit to saving the money for a long period of time, you should choose a high interest certificate of deposit. CDs offer higher interest rates the longer you commit to saving, but most will charge you a penalty if you withdraw the money before the savings term has been reached. If you think you will need some or all of your money before the CD reaches maturity, you should not tie up all of your money into a certificate of deposit.

Money Market Account: Money markets offer higher interest savings than a traditional savings account and allow you to write a few checks each month or quarter. If you write more checks, there are fees associated with using the money. A money market is a good idea for savings that you only plan to access once in awhile, rather than a savings account that simply holds your money until you need it for every other purchase or expense.

Savings Accounts: Typically a savings account allows unlimited, fee-free access to the money deposited, and you earn interest based on how much you have saved.

There are 5 questions you should ask before opening a savings account to ensure you are selecting the right account:

1. How much interest is paid and how is it compounded? Find out what the annual percentage yield (APY) is. You want to find an account with the highest possible APY so you can compare accounts accurately between different banks.

2. Can I withdraw money whenever I want or is there a penalty for withdrawing money before a certain period?

3. Am I limited to making a certain number of withdrawals per month? How many can I make and what are the fees if I need to make more withdrawals than allowed?

4. Where are the local bank branches located? This is important to know if you plan on using your ATM card to withdraw money from your bank account. Find out what fees are associated with using your ATM card at other bank ATMs.

5. Are their any special deals or offers for opening an account right now? Banks regularly offer bonuses or rewards or incentives to encourage people to open accounts with their institution. Find out if the bank is offering anything at the moment and compare to what other banks are offering to determine which is the better deal.

IRAs were created in 1974. They were established to give individuals the ability to save money in retirement accounts or trusts in order to benefit themselves or a chosen beneficiary. There are strict guidelines for operating an IRA, as well as who can serve as a custodian of an IRA which are governed by Sec. 408. Self-directed IRA’s are accounts that the custodian agrees to give the taxpayer greater control over their investment decisions. Sometimes, self-directed IRAs are referred to as “real estate IRAs”, but they can contain any investment allowed under Sec 408, including real estate, options on real estate, private placements, operating businesses, notes, and investment partnerships. The percentage of self-directed IRAs is small compared to the total number of IRAs existing.

Why Go With a Self-Directed IRA?

IRAs have always appealed to individuals who are not as comfortable with the common ups and downs of the stock market. Both Traditional and Roth IRAs are usually invested in a combination of stocks, bonds and mutual funds – so the self-directed IRA gives individuals another option to avoid the ups and downs of stock market investing and provides more control in how their IRA is invested. You can hold a self-directed IRA as either a Traditional or Roth IRA, which means the tax laws of the savings option you select will apply to your self-directed IRA. There are rules governing how assets are purchased (must be considered arm’s length transactions) and what can be purchased in order to qualify a self-directed IRA for IRA treatment – refer to Sec. 4975 to be sure the stipulations and requirements are met to avoid tax penalties.

With the ability to choose your own investment options in a self-directed IRA, you can clearly diversify your IRA investment. When setting up a self-directed IRA as a Roth IRA, you are allowed tax-free growth of the assets, which gives potentially larger returns than what is traditionally possible with retirement assets.

What Challenges Do Self-Directed IRA’s present?

Whenever you make a transaction, you must consider whether or not the transaction meets the requirements of a self-directed IRA. A custodian is also not allowed to give advice regarding investments. Setting up and managing a self-directed IRA requires more energy and is more complicated than other types of retirement investments.

If you are considering a self-directed IRA, you can minimize your risk by transferring a portion of another IRA fund into the new self-directed IRA. The risk is then limited to just that money. If investing in a business through a self-directed IRA, someone other than the owner of the IRA must run the business.

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When you open an Ultimate Savings Account through Citibank with a minimum deposit of $1000, you’ll receive $25. This promotional offer is available until January 31, 2009. You do have to maintain the $1,000 minimum balance for 3 consecutive months to earn the $25 bonus. You can apply online or by calling 1-877-695-9400 (mention code CYA8 to get the promotion) and it is only available for first-time Citibank deposit account customers.

While $25 is not that much, if you’re looking for a reasonable yield interest savings anyway, the Citibank Ultimate Savings Account is a good option with a current yield of 2.75% APY – and the $25 is a nice bonus. There are no monthly maintenance fees, which helps you keep more of the money you earn through interest and your own deposit amounts.

The Ultimate Savings Account has what some people consider to be a low ACH outbound transfer limit of $2,000 per day and $10,000 per month. If this is a problem for you, you can work around it by opening another Citibank savings or money market account and moving money through internal transfers before doing the ACH transfer. Alternatively, if you initiate the ACH transfer from the other bank you’re looking to move the money to – you are not bound by Citibank limitations for ACH transfers.

It’s possible that opening a Citibank account will result in a hard pull of your credit report – although some people have reported a new policy by Citi that does not require hard credit pulls on deposit accounts without overdraft protection. If a hard credit pull is something that concerns you, verify the policy with Citibank before filling out the account application.

The Small Print:

• $25 offer available only to first-time Citibank deposit account customers
• $25 credited to account 120 days from the date you satisfy the offer terms (maintaining a $1,000 minimum for 3 consecutive months upon opening the account)
• $25 bonus payment will be included in the report to IRS regarding amount of interest earned in the year that it is earned.