What are Bank Accounts?
Bank accounts are accounts in which bank-goers can store their money for various reasons. They are offered not only at banks, but also at credit unions, which are non-profit institutions that deal with money. There are four different types of bank accounts, including Checking, Savings, Money Market, and Certificate of Deposit accounts. Each account has different positive and negative aspects and based on the situation and long-term goals; certain accounts may seem more enticing than others.
Checking Accounts
Checking accounts allow holders to deposit and withdraw money in an easy fashion, including using ATMS and checks. Cash and checks are two common methods of depositing money. Checking accounts are occasionally chosen because of the ease with which one can withdraw. For example, debits card draw money from checking accounts in a quick manner. The main downside lies in the fact that one does not earn much interest from checking accounts. There are also potential fees, including those that must be paid if a minimum deposit amount is not reached. While checking accounts are a good option for everyday use, they are not recommended for long term use.
Savings Accounts
A saving account is a type of bank account that allows holders to earn interest on deposits while saving money. Saving accounts can be valuable tools for those who want to separate what they deem to be their “spending money,” from money they would like to preserve for the future. While these accounts are intended to maintain certain amounts of cash for future usage, it is easy to access your account and make withdrawals if required. The minimum balance required to open a savings account is also considerably low, so one can start saving relatively early.
Money Market Accounts (MMAs)
Money Market Accounts, or MMAs, are often described as a mixture of saving and checking account. Money placed in MMA’s will receive greater interest rates than money in saving accounts. However, a negative aspect of this sort of account is the limited transactions that a holder can make. Certain withdrawals, such as those performed in-person or through ATM’s, are usually unlimited. Transactions virtually or with debit cards may incur a fee, depending on the bank.
Certificate of Deposit Accounts (CD)
Certificate of Deposit Accounts differs from other bank accounts because money is held for a fixed amount of time. Upon opening a CD, one must choose the amount of time that they would like their money to be held. Holders cannot access their money in a CD for the duration of their CD. However, one earns a lot of interest with a Certificate of Deposit Account, and CDs are considered a very safe option for holding money.
Which Bank Account is Right for Me?
The process of choosing a bank account should vary for each person. To select a bank account, you should research different fees and contingencies that are unique for each bank. It is also important to observe your personal goals regarding putting your money in an account. Regardless of which account you choose, opening a bank account is a positive step towards learning more about how to protect your money.
Resources
Comments