Bank accounts are an integral part of modern life. They're easy to operate. And, in addition, they are safe since your money is insured by the bank. What's more, banks offer several types of bank accounts that pay you an interest on your deposit, which implies that your money earns you more money. So, let's look at a few different types of bank accounts, so you can decide which is the right one for you.
Checking Account
A basic checking account is also referred to as a transactional account. These are made for everyday purchases. You deposit money into a checking account with the aim of spending, not saving. A checking account implies there will be checks and/or a debit card for a better way to spend.
Savings Account
A savings account is a place to gather your savings. The money you transfer into a savings account will accrue interest and grow over time. Interest is, basically, the money charged by you to the bank for permitting them to store your money. This figure is expressed in a percentage called the interest rate. If $100 is transferred into a savings account that pays an interest rate of 1%, when the year ends, you'd have $101 in your savings account.
Certificate of Deposit (CD)
A CD account enables you to save money at a given interest rate for a particular time period. While a CD is also made for saving, it's not the same as a savings account. With a CD, the money you're saving throughout the life of the certificate isn't accessible. As a result, the interest that accumulates on a CD is usually more than a savings account.
Money Market Account
Similar to a savings account, you're only needed to maintain a certain amount of money in this account. Having less than the required amount will lead to fees. In a money market account, the interest accrued will vary depending on the financial markets.
Individual Retirement Accounts (IRA)
IRAs are centered on retirement. These accounts are available in two types: a traditional IRA, which is tax-deductible, and a Roth IRA, where taxes are deducted when you deposit funds; hence no taxes are owed when you withdraw your funds.
