Banking comes with a variety of accounts consumers can choose from depending on which one provides the desired benefits for each individual’s circumstances. Let’s evaluate Four Types of Bank Accounts Explained after explaining debit and credit card. Don’t forget to check out difference between a current account and a savings account. Salaried individuals and those who have monthly incomes will definitely need a different type of account from that of entrepreneurs and corporate. This article interacts with only four types of bank accounts.
Also known as a current account, checking account offers a quick and convenient way for people to access their money as often as they need. However there are no interest earnings checking accounts. Entrepreneurs and traders who need to access their funds often prefer this type of account for ease of business.
The purpose of this type of account is to provide a hassle-free way to save money. Banks usually set a minimum balance to open and/or maintain these types of bank accounts.
If one intends on saving money for future use not only does a savings account guarantee successful savings but also that money in the account accrues interest. However, the account holder is allowed a limited number of withdrawals and transactions.
Money Market Account
Benefits of a money market account are a combination of those of a checking account and a savings account. You can withdraw funds from the account, and you benefit from a high interest rate. Like other types of bank accounts, money market accounts generally require a minimum balance to open and maintain the account. Some banks limit the number of transfers you can make with a money market account however.
Certificate of Deposit (CD)
This is an option that bankers can choose if they wish to save money for a specified term, with a specified interest rate. The more money you deposit and the longer the term, the higher your interest rate will be.
You may not withdraw funds from most CDs until the account’s term expires. Usually account holders use this type of account while saving up for a specific major transaction.
For the purposes of this article we interacted with only four types of bank accounts. These are not the only ones and bankers may choose from a myriad of them depending on which part of the world they are and what’s available there.