Banks offer a number of different types of accounts to customers and each of these will work in different ways. It is a good idea to learn about the different accounts because that way you will be more likely to choose the one that is most suited to your needs. In fact choosing the wrong bank account could cost you money because it might mean that you losing out on interest or other benefits.
So What are Different Types of Bank Accounts?
Although different banks will have different options it is possible to divide the different types of accounts into four basic types. There can be variations within each of these types of bank account so it is important to always check the terms when considering opening an account. For the sake of convenience though, it is possible to dived bank accounts into the following four types:
The Savings Account
As the name suggests, the savings account is aimed at people whose main purpose is to save money. The benefits of the savings account is that it tends to offer better interest than some other accounts and this is what makes it an appealing option for savers. It will be possible to make withdrawals from this account but there tends to be a limit on the number of times you can do this per month. Most savings accounts will come with an ATM card so that there is no need to go to the bank to withdraw money.
The Checking Account
The checking account is for people who will be making a lot of withdrawals from the account; for instance to pay bills and mortgages. It is called a checking account because traditionally this account primarily uses checks to withdraw money — it is also sometimes referred to as a current account. This account comes with an ATM card and there is usually no limit on the amount of withdrawals that it is possible to make. This tends to offer lower interest than the savings account.
The Money Market Account
This account will generally speaking offer good interest rates but there are some restrictions connected with it. It is required that a minimal balance be kept in the account and there are limitations on the number of withdrawal that can be made from the account each month.
Certificate of Deposit Account
This type of account offers the best interest rates but a set amount of money has to be left in the account for a certain length of time. This means that you can’t touch the money in the account until the agreed upon time without paying a penalty. This is a good option for people that are serious about saving and know that they won’t need this money during the period that it is tied up.
Choosing the right bank account to suit your needs can take a bit of consideration. Each of the different accounts will have pros and cons associated with them.