When it comes to your money, you want to make sure you have it safe and secure inside of your bank account. The type of personal bank account that you put your money in matters. When it comes to personal bank accounts, the four primary types of accounts to consider are a checking account, savings account, certificate of deposit (CD), and a money market account.
Type #1: Checking Account
If you want an account where you have easy and frequent access to your money, you need a checking account. A checking account is an account you want to place the money you need to access on an everyday basis to pay your bills and make purchases.
With a checking account, you can request a debit card to use for everyday purchases. You can also get a traditional checkbook for your account for the occasions when you want to write a paper check.
Most checking accounts are either fee-free or charge a low monthly fee for access to the account. Most checking accounts allow you to pull out money from just about any ATM, with fees for using out-of-network accounts. With a checking account, you can generally make as many withdraws and deposits as you want.
Type #2: Savings Accounts
A savings account is where you want to put money that you don't want to access as easily. With a savings account, you can make as many deposits into the account as you want a month. However, federal law limits the number of transfers or withdrawals you can make from a savings account to six per month.
With a savings account, you want to look for one that has low fees and deposit requirements. Ideally, you want an account that will allow you to make a little interest in the money you have in the account, so it can grow as the money sits.
Type #3: Certificate of Deposit
Another type of account you can put your money into is a certificate of deposit, more often referred to as a CD. With a CD, you place your money into the account and you choose a certain amount of time that you will keep the money in the account, from a number of months to a number of years. By leaving your money in the account for a set amount of time, you will earn a set amount of money. If you take the money out early, you will have to pay a penalty.
Type #4: Money Market Account
Finally, you can put your money into a money market account. With a money market account, there is generally a starting deposit requirement. With a money market account, you can make a greater amount of interest than with a checking or savings account with your money; however, you can access the money easier than you can with a CD, as the money isn't locked up for a set amount of time.
When it comes to your money, you can place your money into lots of different personal accounts. A checking account gives you the most freedom to access the money, whereas a savings account, CD, and money market account allow less access but more potential to earn interest. Talk to a personal banking service to learn more.