Types of bank accounts that you need to know

Bank accounts are of many types. Here is a list of the basic types of bank accounts:

Savings account: These are the accounts which inculcate the habit of savings amongst customers. The bank provides interest on the amount in your account. This account allows you to make a limited number of withdrawals as the primary purpose is to save. You can also make deposits but cannot write checks. Some banks charge a fee if the amount of money in your savings account does not meet the minimum balance requirements of the bank.

Basic checking account: These accounts offer few services at a low charge. You can usually perform only the basic functions of a bank account, like withdrawing, depositing, check writing, etc. However, this type of accounts does not allow comprehensive functions. You can open an online bank account by visiting various banks’ websites.

Interest-bearing checking accounts: These accounts are in complete contrast to the basic checking accounts. They allow you to write an unlimited number of checks and allow you to carry out more comprehensive functions. These kinds of accounts are usually beneficial to those who are involved in the business. These accounts can also be known as the negotiable order of withdrawal accounts. The bank also provides interest on your balance amount. The interest rate depends on the value of the money in your account. Sometimes, the bank may even charge a monthly fee if your account balance does not meet the minimum balance standards of the bank.

Money market deposit accounts (MMDAs): These accounts usually invest your balance in short-term debt. They provide more interest than interest-bearing check accounts, but usually, need a higher balance amount to provide interest. They charge fees if your minimum balance falls below their standards. They allow only six-transfers a month and three of these can be through checks.

Certificates of deposit (CDs): These accounts are also known as time deposit accounts. In this type of an account, the customer is required to keep the money in the accounts for three months and six years. The money in this account is inaccessible for the period selected by the customer, and the customer will receive a high-interest amount at the end.