Banks are there to safeguard money, and have employed different ways to do so. Due to the growth of technology, the banking sector has seen tremendous changes. With the rise of Internet and mobile banking, an influx of options has made banking easier for customers. There are many types of bank accounts. It is important that you chose the best ones based on your needs.
In order to open a bank account, you need to be eligible. You will need valid identification. You can deposit the money through a deposit receipt or through an ATM machine. There are five types of accounts, savings account, checking account, interest checking accounts, money market accounts and certificate of deposits (CD’s).
This is the most basic version and is available for personal, business, student and joint transactions. The personal accounts have more relaxations when compared with business accounts. Banks offer a variety of customizations for these types of accounts. This includes no requirement for minimum balance, facility to use ATM cards and checks. Checking accounts usually allow for unlimited deposits and multiple transactions, and it is the most flexible type of account.
As the name specifies, savings accounts are created for the primary purpose; Saving. These accounts provide a small rate of interest. Unlike checking accounts, saving accounts limit the number of transactions and also deduct money when the minimum balance is not maintained. They also provide ATM, mobile and Internet banking facilities.
Interest checking accounts
Another type under checking accounts is the interest checking account. This account provides a modest rate of interest. It differs from the savings bank account in such a way that, it offers unlimited number of transactions and usually doesn’t levy charges. It does however, require a minimum balance to be maintained. These accounts provide ATM services, and checks for easy access of money.
Money market accounts
Money market account (MMA) offers a higher interest rate in comparison with savings account. MMA’s were usually accounts made for the specific purpose of investing in the stock market. But nowadays, they are used to simply deposit money as well, the higher the deposit the higher the interest rate. They offer limited transactions and require a particular amount to be maintained. These accounts are able to provide higher interest rates since they invest in varied types of schemes.
Certificate of Deposit
CD’s allow you to invest your money for a set period of time for a particular rate. They are also known as “time deposits”. You will be able to withdraw the amount only after that time period. Withdrawing before the time period will result in a penalty. The longer the time period the higher the rate of interest.