3 Types Of Deposit Accounts in Bank

Having a thorough understanding of your financial options, position and resources is a wise idea as it helps you to become aware of your monetary standing. Financial institutions provide a variety of savings options to their clients based on their unique needs. Today we will be talking about deposit accounts which are bank accounts that pay you interest on the balance that you maintain.

Most people probably only know about checking deposit account, which holds the greatest popularity in general. However, there are more options apart from this one type of bank deposit accounts. This article will serve as a helpful guide to educate you about the different types of bank deposit accounts so you can make informed decisions while opening a deposit account the next time.

Types Of Deposit Accounts

 

•  Checking Deposit Accounts

A checking account is a bank deposit account that is more likely to be used daily by the majority of people. Checking accounts are a great way to have access to your funds securely and reliably. They are super easy to access, allowing you to withdraw and spend money at your liking.

With leading banks integrating the latest technology into their work processes, you can use online banking, telephone banking, the ATM, or visit a physical bank for all your financial solutions, transactions, payments, and lots more. Checking accounts provide versatile options that give you the freedom of choice.

Minimum opening deposit and other fees:

Different banks have different minimum opening deposits, but it is needless to say that you must have enough cash on hand to make the initial opening deposit. You should gather relevant information via customer care to avoid uncomfortable or awkward situations.

Make sure that you spend ample time studying the bank requirements before signing off any documents. Some banks may charge additional maintenance fees and require a minimum daily balance on personal checking accounts without informing unless inquired by the customer.

• Savings Accounts

Savings accounts are a great way to build up financial security in the occurrence of adverse situations. They act as monetary padding that you can fall back on in dire times. We as humans act naturally to save up for tough times by cutting down on everyday expenditures or making purchases using promotional codes from places like DealMeCoupon.

However, contrary to checking accounts, savings accounts do not come with the same freedom of making as many withdrawals as you please. Savings accounts have a set limit, after which you need to pay additional transaction fees. Although savings accounts do pay interest, they may vary from bank to bank.

A savings account should not be confused with a certificate of deposits or CD, which comes with high interest rates. A certificate of deposits is a product offered by a variety of financial institutes that pay a predetermined interest rate on your principal amount. The catch however is that you need to deposit a fixed amount of money at the bank for an agreed and fixed tenure.

When should you open a savings account?

If you are wondering whether you should open a savings account or purchase a certificate of deposits, then you must first discover why you need a savings account in the first place. Having identified the need will help you make an intelligent decision in this regard.

If you are low on cash and rely solely on the money in your bank account, then a savings account is a better option as it gives you easy access to your money in case of an emergency. Savings accounts allow your money to stay liquid and also offer a very low minimum opening balance as compared to other savings options.

As opposed to this, if you are willing to put away your money for a longer period without a worry, then CDs will benefit you the most. You can choose whichever term period suits you best, whether you choose to fix your money for a few months or a few years is entirely up to you. The longer the fixed term deposit, the higher will be the amount of interest accrued.

• Money Market Accounts

Essentially, money market accounts are savings accounts that also enjoy the privilege of accessing the finances through both checks and debit cards like that of a checking account. Typically, your money market account will have a limited number of purchases and transactions each month.

MMAs traditionally offer a higher rate of interest as compared to regular savings accounts, which might seem like a lucrative deal at the time. However, a money market account requires a higher amount of minimum opening balance than normal savings accounts. Your money is insured by the Federal Deposit Insurance Corp. at the banks in case they run out of business.

Is a money market account better than a regular savings deposit?

The whole point of having a savings account is to save money. If you have difficulty saving money and have a spendthrift nature, then you must steer right away from this particular option. The freedom of spending that comes with MMAs is huge, and it might be a bad decision as it gets hard not to withdraw funds when you simply can!

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Author Bio:

Eeba Mak is king at YourDigiLab, an expert in producing engaging and informative research-based articles and blog posts. Her passion to disseminate fruitful information fuels her passion for writing