4 Types Of Bank Accounts

Bank accounts are sometimes considered essential nowadays. You couldn’t be simply found carrying around all your money in paper form, as this entails a high level of security risk and inconvenience. There is also the factor that almost everything in this world is run by credit and digital money, meaning that taking advantage of such conveniences can only be brought upon by using bank accounts. Credit cards, for example, are linked to a bank account. 

Everyone knows how useful credit cards are, so that’s just one example of the advantage of a bank account. Even having a Chase business account entails many benefits for you and your company. With that in mind, let’s actually explore the types of banks there are in the world. It’s not a simple savings account, so it’s important to distinguish them in order for you to maximize the money that you need to spend while also gaining the most out of it.

• Checking account – A checking account is one of the more common types of bank accounts. Essentially, a checking account is made with convenience in mind, with something that lets you access your money easily. This type of bank account is best for regular expenses that you may have to pay attention to. For example, buying appliances or things in a mall would be better done using a checking account.

An advantage of checking accounts is that they’re easier to maintain than savings accounts. For example, checking accounts require less minimum balance requirements in order to keep your account running without penalizing you. They also offer the advantage of being able to easily withdraw cash with lesser restrictions. As for savings accounts, the opposite is true. 

Perhaps a possible disadvantage of a checking account is that it has lower interest rates for the money you’ve deposited as compared to putting your money in a savings account. Another possible disadvantage is, of course, the ease of access. This lets you feed on your impulsivity, and it might not help you save money in the long run.

• Savings account – The main purpose of a savings account is within its name. It’s designed to focus solely on savings and for you to save your money for future dates. They have features and safeguards set in place in order for you to focus on the best money-saving behavior you could be in. For example, savings accounts have high restrictions on when you can withdraw your money. This means that you won’t be able to easily access your savings, leading to less impulsive decisions and purchases.

Savings accounts also offer very high-interest rates compared to checking accounts. This means that your saved money wouldn’t lose value as quickly due to inflation. However, savings accounts also have minimum balance requirements that you have to fulfill in order to avoid fees and penalties. 

• Certificates of Deposit (CD) – If you want something that’s a bit more quick on the upside and you have money to spare, a CD may be your way to go. A certificate of deposit is a type of bank account that has higher interest rates even compared to those savings accounts. The difference is that they have a very specific set period of time that you have to leave your money in before you can withdraw it and the interest. They come at the cost of paying penalties if you withdraw your money right away before the maturation date.
• Money market account – Think of a money market account as a more strict version of a savings account. Although they offer high-interest rates than the former, they also require a higher level of minimum balance to maintain. In addition, money market accounts have limited withdrawals within a period of time, usually on a monthly basis.