Type Of Bank Accounts

Saving money is an important life-changing activity. There are people who live from paycheck to paycheck and do not have enough left for the rainy season. These are the ones who end up bankrupt and get bad credit ratings. They should have known about the types of bank accounts so that they could choose the right kind for their spending personality. Most of these people have limited knowledge on the types of bank accounts thus they are unable to save their money. This guide covers the most common account types given by the different banking institutions.

Checking accounts are one of the most popular type of bank accounts taken by many clients. A checking account uses paper checks for its primary transaction, although electronic fund transfers are also available. The checking accounts are usually free of charge but some may require a small monthly fee. Checking accounts require the client's signature before it is processed by the bank. This is to ensure the security of the transaction. Checking accounts with no funds can lead to bouncing checks which may give a customer a bad credit record.

All banking institutions offer savings accounts to its customers. This type allows deposits and withdrawals similar to the checking accounts. However, some savings accounts have monthly withdrawal limits which may not be as flexible as expected. Money can be deposited over the counter and can be withdrawn in the same way or over an automated teller machine (ATM). The ATM service may be offered free or with a charge, depending on the bank's policy. Using an ATM for savings accounts is common among all bank clients around the world.

Types of bank accounts include money market accounts which give higher interest rates on the deposited funds. Due to this feature, a money market account may have restrictions on withdrawing the money. It may not be as flexible as the checking or savings accounts but it assures the investor that the deposited amount will gain larger interest as compared with the other account types.

Certificate of deposit or CD accounts are used by those who wish to save their money but have no plans of withdrawing them soon. The client and the bank agree upon a span of time in which the money should remain in the bank. As a reward, the bank gives a higher interest rate to the client. These types of bank accounts should first be thought about by potential customers before they start depositing their money in any banking company.