Types of banking accounts

Banking: Which account type should you get?

Opening a bank account requires a lot of information. There are so many options that the process can be a bit overwhelming, but here are some guidelines that will help you.

Deciding which bank you’d want to work with is one part of the process. Once you know that, you need to determine which account type suits you best.

What things should you consider?

First of all, you need to set a goal. What is the purpose of the account? Will you write checks to pay bills? Will you use it to build an emergency fund? Do you have a long-term goal that you want to save for? Depending on what your intended use is, you will determine which account type works best for you.

Once you’ve set your goal, you will open the right account type. If it’s going to be for everyday banking, you might want to choose a checking or savings account. If you are going to use it for your emergency fund, you can open a money market account, or a certificate of deposit if you have long-term plans. It might be a good idea to open a savings account at the same time you open a checking account. This will allow you to link both accounts and transfer funds between them.

Another thing you need to keep in mind is the transaction limits. For example, savings and market accounts only allow you to make six withdrawals or transfers in a month. Checking accounts aren’t so restrictive, but they might limit the amount allowed for debit transactions or ATM withdrawals.

When deciding which account type is best for you, you need to take the fees into account. Check with your bank and see what they offer, as sometimes they can offer no maintenance fees for a certain period. However, besides these typical fees, also consider early withdrawal penalties for CDs and determine if you can afford it, in case you ever need it.

Read the fine print. Carefully check the brochures and all the information your bank provides and ask all the questions you need to ask!
 

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