The following is an article “Basic Bank Accounts”
by Marc Primo.
Knowing you need to save money and knowing how to do it are very different things. The good news is, there are at least four distinct types of account that may work for you. The most well-known varieties of accounts for your cash include checking accounts, savings accounts, certificates of deposit (CDs), and money market accounts. The right type of account for you depends on your lifestyle and personal goals.
Four Types of Savings Accounts to Contemplate
If you are looking to save money this year, here are four Kinds of bank accounts that might suit your goals:
Checking Account
If you need easy access to your cash, a checking account may be your best choice. Using a checking account, you could write checks from your balance to pay for goods or services. Provided your bank provides online account management, you may also pay bills and transfer money online. Some checking accounts also offer debit cards which make using your account funds especially convenient.
Though the benefits of checking accounts are broad enough to help nearly anyone's fiscal picture, there's one notable downside to think about:
Many checking accounts barely pay any interest on your deposits. Therefore, if you want to earn interest and increase your money with time, you'll be better off taking a look at other types of account.
Savings Account
While savings account operate similarly to checking accounts, they do not offer a checking element in regards to accessing your money. Generally, you can access the funds in your savings accounts reasonably easy via an online account management system, in the bank itself, or in an ATM.
The best savings accounts offer low fees and a minimum deposit requirement. The very best thing about a savings account, however, is it generally offers interest rates that are higher than checking accounts. If growing your money while still having access to it is the goal, this account is for you.
Certificate of Deposit (CD)
Where checking and savings accounts make it easy to get your money when you need it, a certificate of deposit or CD ties up your cash for long stretches of time. You can get it sooner if you are willing to pay the penalty. With a CD, you begin by deciding on a length of time for the cash to grow and stay unmoved-- usually somewhere between 3 weeks and 10 decades. Throughout that time, your deposit will generate a predetermined rate of return depending on the timetable you chose. You'll get a rate that is higher the longer your money is locked in. On the upside, CDs regularly provide higher rates of interest than any other type of low-risk savings or investment account. There are downsides to any investment, but for the most part, CDs are a safe bet.
Money Market Account
Many money market accounts also supply you with a debit card that makes it easy to access your cash quickly and without hassle. If you want the capability to withdraw money in an emergency, a money market account will not keep you from doing so.
You would generally need to deposit $1,000 or more, but you tend to make more interest than you would with standard savings or checking accounts. Unlike CDs, however, a money market account will not tie up your cash for any predetermined length of time.
The frequency of allowed withdrawals may change depending on government regulations so make sure you to find out and avoid any penalties.
Which Account do you need?
Reality is you may need all of them. Finances are never as black and white as we would like to believe. One thing is certain. How we choose to use or save our money today will undoubtedly shape our future.