There are many types of bank accounts available for personal or business use, but do they truthfully serve a purpose? Check the main five bank accounts everybody needs to have! Plus, learn which type of bank account is the most suitable for you.
Having too many bank accounts may seem overwhelming, but if you learn which ones you really need it can be really satisfying.
You don't have to get stuck in a traditional checking account, so take a look at the best bank accounts that everybody needs!
1. Non-fee checking account
If your traditional checking account is charging you fees, then you need to switch it as soon as possible!
Analyze the choices and prioritize those that grant no fees at all. Fees may seem low and harmless, but they will end up taking lots of your money as years go by.
Checking accounts are the ones where your day-to-day money is. It will be the account you will use to pay bills, make purchases and deposit your paychecks. So you will need one that protects your money!
2. High-interest savings account for emergency funds
Savings accounts are the best place to put your emergency fund. And you need an emergency fund no matter what! Unexpected things happen, the world is constantly changing and you better have some savings when that happens.
So, when you search for a savings account, pay special attention to the interest rate. The higher, the better. Remember to check online banks! They usually have special benefits you should also consider.
3. Low-fee (or no-fee) cash-back/rewards credit card
This isn't actually a bank account, but you will need one to get it. Credit cards can be a really useful and convenient financial tool, especially if they are cash-back cards.
The best two cash-back cards are:
- Tangerine Money-Back Mastercard: This card allows you to choose the categories in which you spend most of your money to maximize your cash-back.
- Scotiabank Momentum Visa Infinite: This card gives you up to 4% cash-back on your purchases.
4. Investment account for retirement
Besides from your day-to-day account and the one that allows you to save your emergency funds, you may also want to open an account for your future plans. There are many types of retirement accounts, but the best one also involves investing!
If you are keen on earning the highest return possible with your retirement money but you are new to investing, you can start with a low-fee mutual fund. If you are comfortable managing your investments yourself, you can look for a low-cost brokerage account.
5. High-interest savings account for a particular project
This type of savings account will be specifically destined to save money for a particular goal, like a vacation or your first home.
In this case, it's the best way to stash your money to keep you from spending it, especially if you are not that disciplined to keep it in your regular account.
As well as we suggested in the example of savings account for emergency funds, you should look for those accounts that offer high-interest rate.
WHICH TYPE OF BANK ACCOUNT YOU SHOULD OPEN?
You want to open a bank account but there are too many options? Banks often offer a variety of accounts, so it may take a bit of research to find the one that suits you best. Check these tips that will help you decide!
1. Basic checking account
These type of accounts is one with which you can make both deposits and withdrawals on a regular basis and don't usually have transaction restrictions. You can also want to open a savings account with a checking account with almost no interest. With a checking account, you will also be able to write checks out of the account to pay services, like tour phone bill.
2. Money Market Savings account
This type of account is similar to the previous one as it allows you to write checks out of the account. Nevertheless, Money Market Savings accounts will apply transaction limits, so you will have a limited amount of checks per month.
The benefit of a Money Market Savings account is that you will earn higher interest rates than with the checking account.
3. Regular Savings account
This option suits everyone! As in the checking account, you can also make deposits and withdrawals without transaction restrictions. With Savings accounts you can also earn a regular interest rate, which does not vary.
4. Certificate of Deposit (CD)
In this case, you can earn a higher interest rate than in other accounts. However, in a Certificate of Deposit, you will need to commit to having it for a determined period of time - anywhere from a month to 10 years. The more you commit to it, the higher the interest rate you will receive.
Bear in mind that if you withdraw before your term you will be penalized, and therefore earn less money.