A Review On Different Types of Bank Accounts

Having a bank account can be a significant help in achieving your financial objectives, regardless of whether those objectives are to spend or save money. Following is an explanation of the five primary categories of bank accounts, from which you can choose the one that is most suitable to your requirements.

1. Current and Savings Accounts

Because there is no limit on the number of deposits or withdrawals that can be made from a checking account in a given month, this type of account is ideal for managing day-to-day expenses. You will typically receive a checkbook along with a debit card when you open a checking account. This will allow you to write checks or use your card to make purchases and withdraw cash while you are away from home.

Although the vast majority of checking accounts do not generate interest, there are progressively more options becoming available that do. If you spend more money than you have in your checking account, you may be subject to overdraft fees, which is perhaps the most significant disadvantage of having a checking account.

2. Places to Put Money Away

A savings account is, as its name suggests, intended to be used for saving money. You will earn interest on the money that you keep in the account; however, you will not typically receive an ATM card or checks associated with the account.

In accordance with Regulation D, you are only permitted to make a total of six withdrawals each month. However, in light of the ongoing coronavirus pandemic, this policy is being put on indefinite hold.

3. Accounts on the Money Market

You can think of a money market account as a hybrid of a savings account and a checking account. You not only have the convenience of a debit card and the ability to write checks, but you also earn an interest rate that is comparable to that offered by savings accounts. On the other hand, money market accounts typically only allow their holders to make a maximum of six withdrawals each month, and opening one typically requires a deposit of at least $500.

4. CDs

When you purchase a certificate of deposit, you are committing to keeping your money in a bank for a certain amount of time (usually anywhere from three months to 10 years). In return, you will receive a fixed interest rate that will not change, regardless of whether or not rates overall go down.

The one and only catch is that you won’t be able to access your funds before the CD has fully matured. If you do, you’ll pay early withdrawal penalties.

5. Retirement Accounts

There are many distinct varieties of retirement accounts, including 401(k)s, Traditional IRAs, and Roth IRAs, among others. You may be eligible for certain tax breaks, employer matching contributions, and other unique benefits, depending on the plan that you use, all of which can assist you in accumulating a sizeable nest egg for your retirement years. However, there is typically a limit on the amount of money that can be contributed each year, and you may be subject to penalties if you withdraw money before the specified time.

6. Investment Accounts at a Broker

A brokerage account is a type of investment account that allows investors to buy and sell various types of financial products, such as bonds, stocks, exchange-traded funds (ETFs), and mutual funds. Create a brokerage account with an investment company so that the company can execute trades on your behalf after you have opened the account. In addition, some full-service brokerage accounts provide individualized service and access to the services of a financial advisor for clients to obtain financial advice.

7. Accounts for the Management of Cash

You can make purchases, save money, and make investments all at the same time if you have a cash management account (CMA). CMAs have features that are analogous to those of checking accounts, including the potential to come with an ATM card, a debit card, and the ability to write checks. They also serve the purpose of a savings account given the competitive interest rates they provide.

Because non-bank providers, such as brokerage firms, typically offer cash management accounts, you may also be able to invest in securities utilizing the same account. This is because non-bank providers generally offer cash management accounts.

When Deciding What Kind of Bank Account Is Right for You, Here Are Some Things to Keep in Mind:

When searching for the best type of bank account to meet your requirements, there are a few characteristics you should keep in mind, including the following:

Financial Goals

What are you hoping to accomplish by opening a bank account? If you plan on making financial transactions, you should open a checking account. Choose either a savings account or a certificate of deposit if the goal is to accumulate savings and build wealth. A money market account might be the right choice for you if you’re looking for a compromise between the two options.


There are a variety of fees associated with bank accounts, including those for overdrafts, ATM usage, daily balances, paper statements, and monthly maintenance. Look for an account that has no monthly service charges and read the fine print to figure out how to avoid any other fees that may be associated with it.

Minimum Balance Requirements

There are some accounts that require a certain minimum deposit to open the account. Choose the type of bank account you want to open based on how much money you plan to maintain in the account at any given time.


Even though savings accounts are the most common option for expanding your funds, there are also checking accounts that offer interest on deposits. When deciding which account is best for you, take into consideration not only the interest rate but also how it is compounded.

Banking Needs

Everyone has different requirements from their bank. Some people favor adaptability and convenience, while others are more interested in accruing rewards and interest. The best checking account is the one that enables you to effectively manage your finances and make progress toward your objectives.