What are the different types of bank accounts? Bank account is defined as the records of our financial transactions in the bank. These are documentations of the different ways we keep and manage the money that we have in the different banking institutions. As there are many ways we can keep money in the bank, it just means that there should be different types of bank accounts too. The main types of bank accounts are the checking account, savings account, money market account, and certificate of deposit, among others.
The checking account can also be known as a transactional account or a current account. This pertains to types of bank accounts wherein money can be withdrawn anytime. There are no restrictions in the number of times you can withdraw in a day as well as the amount of the money you would want to withdraw. These types of bank accounts are called checking accounts because you will need a ‘Check’ to do a withdrawal. The paper check will serve as your authorization that money can be gotten from your account. Before when you have a checking account, the only way you can withdraw is through the paper checks. You would have to go to your bank to have the check encashed. Now, there are checking accounts that come with ATM cards. This will allow the user to withdraw money from the account through ATMs worldwide, anytime.
Savings accounts are types of bank accounts that are aimed to make you save money. Here, there is a certain limit on the amount of money that you can withdraw in a day. There are also restrictions for as to how many times you can only withdraw in a day as well. The thing is that the money you deposit in these types of bank accounts earns interest. Each bank has a different interest rate to offer you. If you want to keep track of your savings account, you can simply request a passbook. If you are using a passbook, you will have to go to the bank to do a transaction – deposit or withdraw. But if you want a more mobile way, you can easily get an ATM card. If you have an ATM card, you can deposit and withdraw to and from your savings account anytime and any day – anywhere.
Money market accounts are types of bank accounts that earn more interest than savings accounts. The main difference of this versus a savings account is that there is usually a huge amount of minimum balance that has to be present in your account. If you do not have the minimum balance in your account, then you will be charged different fees. Also, people are only allowed to make 6 withdrawal transactions each month when they have money market accounts.
Lastly, we have certificate of deposit accounts. These are types of bank accounts that require a deposit that will be kept in the bank for a fixed period of time. This is why certificate of deposit accounts are also called time deposit accounts.