Types of Accounts
Imagine a banquet table with an array of different dishes. You can opt for one particular salad or fill your plate with a variety of tastes. The same is true of today’s bank accounts, because there are plenty from which to choose.
Checking Accounts
Just like it sounds, this account allows you to write checks against the balance you hold in your account, as well as access your money through ATMs, your debit card or online banking. It is a functional account, best used for everyday expenses and not for long-term savings, as it rarely earn any interest. Most banks offer a myriad of checking accounts from which to choose.
Savings Accounts
Savings accounts offer fewer variations than in the checking arena, and tend to require a low minimum balance. Most people open a savings account at the same bank as they do their checking, for the sake of convenience, but feel free to shop around for a higher-interest bearing account.
Money Market Accounts
Money market accounts earn a higher rate of return than most savings accounts, sometimes as much as double the interest. The minimum balances are generally higher–$500 to $1,500–with certain withdrawal restrictions.
Certificates of Deposit (CD)
CDs offer higher interest rates than general checking, savings, and money market accounts. In fact, they are the highest interest bearing accounts you can invest in and still get an FDIC insurance guarantee that your money is safe. However, CDs pose some liquidity restrictions.