3 of the Best Types of Bank Accounts

Hello out there wherever you are right now. Well, I guess right now is here. Today this one is for the ones who looking into getting a bank account. I know speaking for myself, I didn’t trust anyone with my money especially a bank for a long time. I thought my mattress was the safest place in the world. That was until I started to get a better understanding of money. Once I understood that money was a tool, something to use. Not something you hold onto, not saying you shouldn’t save but it’s better ways to save. And we’ll get into them other ways later. Right now, we going to start with the first step to that process. And that’s picking the right bank account. We going to go over 3 types of bank accounts I feel that everyone should have and the difference between each my friends. These aren’t all the bank accounts, there’s many different kinds. Again, this just my 3 I feel everyone should at least have.

Checking Accounts

  We are going to kick this off with a checking account my friends. Checking accounts are made for everyday use. For instance, paying bills, gassing up the car, buying food, buying clothes, online shopping, etc. They usually come with a checkbook and/or debit card my friends. Also, some may have a low annual percentage yield of something between 0.0% and 0.5%. So, that’s checking accounts for you, my friends.

Pros

• You have easy access to your money with ATMs, Checks, and debit cards.
• Direct deposit services that will allow you to get your money automatically deposited into your account on payday.
• Usually with a checking account you are able to pay your bills electronically, saving you time for other things important to you.
• Most checking accounts come overdraft protection; this is really handy when you can’t cover the cost of something.
• Checking accounts keep very good, detailed records of all your transactions. Helping you keep track of where your money is going.
• Checking accounts allow you to feel safe and secure by insuring the money in your account up to a certain amount.

Cons

• Checking accounts come with all kinds of fees that can really add up if you’re not careful.
• Checking accounts doesn’t really allow your money to grow because usually offer little to no interest rates.
• While overdraft protection is useful, if you’re not careful those fees.
• Some checking accounts want you to maintain a minimum balance, if you fail to do so there will be repercussions.
• Checking accounts are designed for transactions and not for growing your money.
• While yes, your money is safe and secure there is a chance of fraud and identity theft.

savings account

  Next up on my 3 bank accounts you should open is the savings account. These accounts come with its own peculiar characteristics as well like, they usually have higher annual percentage yielding rates between 0.5% to 2.0%, they can only make limited money withdrawals a month, and they don’t come with any debit cards or checkbooks. Because all that savings accounts are best for its name, saving! Save and let the money build on money for you, my friends.

Pros

• The Money you put into your savings account will grow because savings accounts will allow your money to gain interest.
• With saving accounts there is really low risk because your money is secured by Federal Deposit Insurance Corporation (FDIC) in the U.S.
• There is good liquidity within savings accounts, in case any emergency pops up.
• Having an account just for saving really encourages you to save up to get to your personal goals.
• You can have your savings account set up to where money is automatically transferred from your checking account to your savings account, making it easier to save.
• Savings account will often have little to no fees at all.

Cons

• While your money does grow in savings accounts, it’s usually slow because the interest rates are low.
• Inflation is something you have to be aware of because if it goes too far your money could lose purchasing power over time.
• You have to maintain a minimum balance in order to avoid fees that can eat into your savings.
• They are less accessible than checking accounts, causing them to be really inconvenient at times. Making it so you have to transfer money.
• Saving accounts often come with a limited amount of transaction you can have before you’re hit with fees.
• You may miss out on an opportunity to invest if your focus is to grow your savings.

Money Market Accounts

  Last but not least up on this list is MMAs or money market accounts. Now my friends this account is very similar to your savings account with a few different characteristics. These are just like saving accounts just with a debit card and checkbook. You can use this account a little more frequently. And they do have a higher minimum that you will have to keep inside the account my friends.

Pros

• They have higher interest rates than savings accounts.
• Unlike a savings account you can access to checks and debit cards.
• Your money is still insured by the Federal Deposit Insurance Corporation (FDIC) (in the U.S.) up to a certain amount.
• You can get to your money without any real significant penalties or delays.
• They offer incentives for the higher your balance is.
• They are super low risk and very safe to store your money in.

Cons

• To open up an account you have to have a pretty high minimum balance.
• You have limits on the number of transactions you can make within a month.
• The interest rates for these accounts fluctuate.
• The interest rates are usually lower than other investments you can make.
• You still have fees you have to deal with.
• You also have to look out for inflation.

Honorable Mention

  I do have an honorable mention for you guys as well since you stuck around this long and read almost the whole thing. Thanks, by the way. But the honorable mention is CDs. CDs have the highest interest rate of the 3. It does require your money to be locked in for a period of time, 6 months to a few years actually. These are really for the long-term savers out there my friends.

Summary

  Hopefully this post helps you better understand or give you an idea of what kind of bank account you would want to open in the future. You can always head to a bank and speak with someone with much more knowledge on this topic then me my friends. As always do your research before you make any decision on anything my friends. Thanks for your time today as well as the visit. Please tell your family and friends about the blog if you feel they can use the help. Good luck!