Types of Bank Accounts that are Commonly Provided by Banks

Infotipsnews.com – Types of Bank Accounts that are Commonly Provided by Banks. bank is present in our lives to fulfill various needs. Therefore, they offer many types of products and services for those purposes. Since there are many products that you can choose from, you should choose the ones which are best for your needs.

You may have various purposes, and therefore you should the products or services with fit it. Other things to consider are the procedures, the fees and rates, and some other conditions. And to help you with that, we will discuss the types of bank accounts that are commonly provided by banks and some other financial institutions.

Five Common Types of bank accounts Served by Most Banks

When you go to a certain bank you should know that there are several bank products and services that are offered. And each of them will have a certain purpose and plans that are different from one another. Therefore, you should choose the right product which is suitable for your purpose.

So, when you need a bank account for your money, but you are sure yet what account you will make, the information below might be helpful for you. Keep reading it because we will discuss the types of bank accounts in this article.

1. Saving Account

This is the most common product offered by every bank. The saving account’s main purpose is to set aside some money for future needs. The banks will offer certain rates for this kind of account. That’s why when you put your money in this saving account, it will grow over time.

This is the one of most popular types of bank accounts used by the customer. Because the requirement is very simple. Everyone, literally, can have this product. A child can have this account when the parents set it for them.

A teenager can also open an account to save some amount from what they earn from their first job to set a stable financial future. That’s why this is one of the types of bank accounts chosen by various customers. When you ask people “why do they go to a bank?” then most answers you heard will be, “to save money.”

2. Checking Account

For business, this type of account is likely the most suitable one. You can save, withdraw and do any other banking activity through one account. This type is also the best choice to save your cash in a short term and manage your cash flow regularly.

When you only have a little amount of balance, and you often use a debit card for daily payment, then is kind of account is the fittest for that need. However, this account doesn’t offer interest rates and it has become subject to some fees and procedures, including the monthly fees for maintenance.

It also applies the rule for minimum balance, a certain amount that you should have in your balance; and the amount is determined by the bank side. Yet, still, you can find some institutions which apply lower monthly fees with a free maintenance fee that may burden you.

3. Certificate of Deposit

This is also one of the types of bank accounts that are commonly taken by bank customers. It is like a saving account, but it has a certain fixed term agreed upon by both sides, the customer and the bank. Usually, the bank will offer several fixed terms agreed upon, such as three months, six months, a year, and so on.

It has higher interest rates than the saving account, but you are obliged to keep your money for the full term. You cannot withdraw it out of the term written in the appointment. Otherwise, you will get a penalty to pay, or the amount that you save will be cut for that kind of fee. If you want to discipline yourself about your finances, then this choice could be the best one to do.

4. Retirement Account

As you can see from its name, this account’s main purpose is to set aside the money for spending their retirement. Most banks offer retirement accounts for the individual. And some others will also offer retirement accounts for small businesses.

And most of these types of accounts offer some advantages. You will be able to avoid paying the income tax for the contribution growth in a year.

But, still, you have to pay the taxes when you withdraw your money later. But, this is still the best place to save for the retirement plan since this will allow you to invest your money in the stock market. And this will create potential returns in greater numbers than the amount that you could get from other kinds of accounts.

5. Money Market Account

This type of account is a combination between saving and checking accounts. This product offers a limited check-writing feature and it offers a higher interest rate than both saving and checking accounts.

And it makes the account beneficial either for a short or long-term purpose. If you wish to get a greater number in your balance and have the ability the get a higher interest rate and at the same time you can write a check, this type of account is just the perfect choice that you should take.

As this is the best place for those who have high balances and still want to get a high-interest rate so that the money will grow up easily, this account also has some drawbacks. First of all, it requires a higher minimum balance. And sometimes, in certain financial conditions, it will only apply a low rate for the interest.

Besides, a certain maintenance fee is also another charge you have to pay. It will also apply the limitation amount for the withdrawals procedures. Therefore, if you want to have this account, you’d better use it for a longer-term financial plan, like a down payment for a house. And don’t try to take the money from its place for any other purposes so that will still be there when you need it for what you’ve planned it for.

When you want to put your money into a bank account, you should first of all, think about what is the main need or the main purpose that you do. Once you’ve set your main goal, then you can choose one out of many types of bank accounts available at the banks. Learn what has been discussed above, it may help you to make the right decision.