Bank Savings

Different Types of Bank Accounts: Guides, Merits, and Disadvantages of Opening Any

A bank account is a safe, trusted, and responsible way to keep your money. Presently, there is online banking privilege, traditional banking, and other options. Different types of bank accounts can serve numerous purposes depending on what you need them for.

While some will help you pay your periodic bills, some are designed for long and short-term savings. The most common ones include:

  • Savings Accounts
  • Current Accounts
  • Checking Accounts
  • Certificate of Deposit Accounts (CDs)
  • Money Market Accounts (MMAs)
  • Savings Account

A savings account is a type of account in which you hold the cash you don’t intend to spend right away. This account attracts some monthly maintenance fees and minimum balance requirements. Although it pays you some interest on your deposit, the interest rate differs from bank to bank.

Since this account helps you pay daily bills, you can consider opening either a basic or standard one. However, there might be some limits to your monthly withdrawals before which excesses fees are charged when exceeded.

Current Account

Essentially, a current account allows you to use a cheque for your transactions. It’s built for huge sums. Similar to the savings account, it can cater to your daily spending. In addition, current accounts usually have lower interest rates compared to inflation rates.

With the current account, you can continue your daily transactions without any restrictions. As a result, this account is often the choice for entrepreneurs, marketers, and people handling large-scale businesses to ease access to their money.

Checking Account

A checking account is a type you can open at a physical or online bank. Unfortunately, people often mistake it for a current account even though they aren’t the same. Here, you can save funds you plan to use for future endeavors or bill payments.

Moreover, it comes with a debit card for making different exchanges and paper checks. It can be linked to other types of bank accounts. Occasionally, non-finance banks may offer checking accounts. Some checking accounts include student checking, interest checking, kids checking, etc.

Certificate of Deposit Account (CDs)

This bank account type holds a certain amount of money for a stipulated time where the bank pays interest. CDs are types of saving accounts that are considered very safe options. The disclosure statement states whether it is varied or a standard amount for the interest rate.

One downside here is that inflation rates grow more rapidly than actual money, which lessens your overtime returns.

Money Market Accounts (MMAs)

MMAs offer significant interests and work similarly to savings deposit accounts. You can also open it in a traditional bank, online bank, or credit union. You’ll have access to debit cards, ATMs, etc.

In addition to its easy access, you have your funds insured, hence securing them. If you want good dividends, a money market account might be best for you.

Now, you’ve learned about some of the basic types of bank accounts. Depending on the amount of business type you’re practicing, so are there accounts you can secure your funds in. Banks like the CIT bank lecture their customers on these types, guiding them to an appropriate one.

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