What Are The Types Of Bank Accounts?
By Peter Kenny

If you are new to banking, you may be surprised to learn that
there are many types of bank accounts available. The type of
bank account that you will need will depend on several factors.
This article will examine some of the more common types of bank
accounts that you will find at most banks and credit unions.

First, you should understand that not all banks and credit
unions will offer the same types of accounts. Larger banks will
usually offer the most services, but smaller banks are also
usually well suited for most consumer needs.

The most popular bank account is the checking account. A
checking account uses paper checks and/or electronic funds
transfers as its primary means of business. When you open a
checking account you will receive paper checks that you can use
to pay bills and make purchases. Many checking accounts are
free, but some may charge a small fee each month. With your
checking account you may get access to ATM machines as well. The
most important thing to remember about checking accounts is to
not write checks that you cannot cover with the funds in your
account. This is called bouncing a check and it can cost a lot
of money in service charges and fees. It can also lead to
criminal charges in some cases.

The savings account is the next most popular bank account type.

A savings account allows you to make deposits and withdrawals,
just as a checking account does, however, savings accounts are
not as flexible as checking accounts. Some savings accounts only
allow a certain number of withdrawals per month. Normally,
savings accounts do not include checks, so to get cash you have
to visit the bank in person. Today, most banks to allow savings
accounts to be accessed through ATM's for both deposits and
withdrawals.

A third bank account is the money market accounts that some
banks offer. A money market account pays higher interest on your
deposits than a savings account but there are added restrictions
as well. Often, these accounts will have a minimum balance that
must be kept in order to earn the higher interest rate. Most
accounts of this type also limit withdrawals to six a month.
This type of account is used most effectively for cash that you
do not think you will need to use soon.

Certificates of deposit are yet another type of bank account
that some consumers find useful. These accounts should be
thought of and treated as investments rather than money-moving
accounts. CD's require you to make a deposit and to agree to
leave the money in the account for a predetermined length of
time. In exchange, the bank or credit union agrees to pays
higher interest.

With a CD, you are required to keep the money in the CD bank
account until the maturity date of the CD. If you take the money
out early you are usually charged a penalty fee. In some cases,
you may be allowed to withdraw the interest that has accrued
without suffering a penalty, but you should check on this before
assuming it to be true for all CD's.

About the Author: Peter Kenny is a writer for The Thrifty Scot,
please visit us at http://www.thriftyscot.co.uk/Banking-Savings/
and http://www.thriftyscot.com/refinance/ Visit
http://www.thriftyscot.com

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