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What are Different Types of Bank Accounts?

Access to an ATM is often part of both checking and savings accounts, but savings accounts are not as flexible as checking accounts.
Banks usually allow checking account holders to make as many withdrawals and deposits as they wish.
Certificates of deposit and money market accounts offer higher interest earnings than checking and savings accounts, but they come with more restrictions.
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  • Last Modified Date: 27 August 2014
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There are several different types of bank accounts. Understanding them all can be difficult, as each banking institution may offer a broad range of bank account types. However, most bank accounts fall into one of five categories. By learning the different account categories, you can make deciphering the choices offered at your banking institution much easier.

A checking account is a bank account that uses checks as the primary instrument for withdrawing money. With a checking account, you can make purchases, pay bills, and give or loan money to anyone you choose. You can also use a check to transfer money from your checking account to a bank account at a different financial institution. Usually, financial institutions allow account holders to make as many deposits and withdrawals as they wish. Many allow account holders to make withdrawals and deposits through automatic teller machines (ATM) as well.

A savings account is another type of bank account that allows the holder to make deposits and withdrawals. However, savings accounts are not as flexible as checking accounts. Often, holders of this type of bank account are limited in the number of withdrawals and deposits they can make each month. Also, savings account holders are not able to access their money with checks. Many financial institutions allow savings account holders to make deposits and withdraw funds through ATM, however.

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Another type of bank account is a money market account. This type of bank account pays interest at a higher rate than the rate paid on interest-bearing savings and checking accounts. Often, money market accounts impose a minimum balance for the account to start earning interest. The minimum required balance on a money market account is usually higher than that imposed on a checking or savings account. With a money market account, withdrawals are limited to six per month. No more than three of these withdrawals can be by check.

Time deposits, frequently referred to as certificates of deposit (CDs), are bank accounts that require the account holder to make a deposit and agree to leave funds in the account for a specific amount of time. In return for this agreement, the financial institution pays interest to the account. Often, the interest paid on a CD is higher that the rate paid on other types of bank account. The account holder is required to keep his or her money in the account until the specified term is over. However, some financial institutions allow account holders to withdraw interest, without affecting the principal. In some cases, account holders may be allowed to withdraw their principal funds before their CD matures, but a penalty is typically charged.

Some financial institutions also offer basic, no-frills bank accounts. A no-frills bank account may allow the holder to pay bills and cash checks without paying the high fees associated with completing such transactions without an account. An account of this type will likely allow for only a limited number of checks, deposits, and withdrawals to be processed in any given month. In most cases, interest is not paid on a no-frills bank account.

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anon305742
Post 39

In time, will you be able to keep your student account, or will you be pushed to have a real bank account?

candyquilt
Post 38

@alisha-- I think a checking account is the best account for students and young professionals. I've had one for years and it has been working really well for me. I have a debit card for my checking account that I use for everyday needs. I just make sure that I have enough money in the account when I'm spending because if you do an overdraft, the bank charges crazy fees until you deposit more money.

Overdraft is when you take out more money than there is in the account. It's really silly if you think about, why do banks even allow people to withdraw more than they have? It's to charge them fees. But it's sad because someone can suddenly start owing the bank a lot of money that way.

But if you keep an eye on your account (which is so easy nowadays with online banking), you won't have any problems.

discographer
Post 37

What's the best student bank account?

ddljohn
Post 36
@anon60092-- I'm not an expert in banking, so you should probably speak to a bank representative for details. They can figure what the best account is for you.

If you want to withdraw money easily and also save money though, you probably want both a checking and a savings account.

You could just get a savings account but it will be hard to withdraw money when you need it. Some banks don't even allow the withdrawal of money for a certain period of time when you open a savings account.

anon230662
Post 33

Informative, but can I have more details because children need these topics for their project, for which they need more details.

anon152724
Post 31

thank you. i am now on my own with my own bills and this has helped a bunch. -tori

anon148221
Post 29

Thanks. This really helped. I run a company that involves a lot of bank deposits by clients and sometimes even out of the country. What is the best account for this?

anon109810
Post 24

Thank you so much for a clear details concerning banking.

mitch21
Post 23

which is better, an account that earns compound or simple interest? i really do want to know.

mitch21
Post 22

what difference does the interest rate make in a savings account and in a checking account?

mitch21
Post 21

how much better is a savings account than a checking account?

anon93486
Post 18

I'd like to own a house with two other people, and would like to have it in the three joint names (all members of the same family). Similarly I would like a bank account to manage said house, run or accessible by all three house owners, and one or two rooms in the house would probably be rented out. What sort of account do I need? (no share dealing thanks!) Thank you.

anon86038
Post 16

thanks this article has helped me a lot for my maths project-banking.

anon81782
Post 14

thanks. this really helped.

anon76838
Post 11

thanks! helped me a lot.

anon60092
Post 8

You want to save money, but you need to pay monthly bills. What type of account should you open?

anon42851
Post 7

can i get interest on an amount held in my current account?

anon32608
Post 6

Reg D just changed. Under Money Market Account it sates that only three withdrawals can be by check; this is no longer true. There is still a limit of six withdrawals per month, but there is no particular limit on any one type of withdrawal.

dnmadhab
Post 5

Can a statutory corporation operate a savings bank account for a government fund?

anon3776
Post 1

what is the received money module?

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