What type of account is a Catastrophe Savings Account?

A Catastrophe Savings Account is classified as a regular savings or money market account. This type of account is designed specifically to encourage individuals to save funds for unforeseen events, particularly catastrophic situations such as natural disasters. These accounts typically offer more favorable interest rates compared to standard checking accounts, while also providing the liquidity of a savings account. They are structured to promote savings for emergencies or necessary expenses that may arise from catastrophic events, making it easier for account holders to access their funds when they need them most.

This distinguishes them from checking accounts, which are primarily for daily transactions and do not typically accrue significant interest. Similarly, a certificate of deposit requires funds to be locked in for a specified term, and investment funds focus on growth rather than safeguarding for emergencies. Thus, the category of a regular savings or money market account best reflects the purpose and functionality of a Catastrophe Savings Account.