Are you trying to determine what bank account makes the most sense for you? Banks in the United States collectively hold about $75 billion in their vaults at any given time!
A bank uses the money in a customer’s deposit account to make loans and generate revenue for the institution. Depending on the account you open at a bank, you may also be able to earn income from the money you keep there.
Read on to learn about the different types of bank accounts that exist today!
Savings Account
The first thing that may come to mind when you think of a bank is a savings account or a mortgage. Although the latter is a loan against an underlying asset like real estate, you can earn interest on your savings account.
Some banks will pay different levels of interest depending on balances in a tier system. For example, you may earn a higher interest percentage if your savings balance is $50,000 than if it is $5,000. This will vary from bank to bank or may not be offered at all.
Infinite banking basics include information about savings accounts for the benefit of customers like you.
Checking Account
A checking account is one of the most popular kinds of accounts at banks across the globe. In its most common form, a checking account will not pay interest on the money kept in it.
Instead, account holders have the convenience of using a debit card or checkbook to pay for things. A debit can be used at an ATM or branch location to withdraw cash.
You can also buy something at a merchant location and receive cashback from your account when you complete the purchase. Paying for goods and services with your debit card can be a safer way to buy than on credit.
Money Market Account
The best local bank will offer a money market account as an alternative to a traditional savings option. These accounts operate like a hybrid version of a savings and checking account.
You can earn interest on the balance kept in your account but also have privileges like being able to write checks. One of the important aspects of a money market account is that you are often limited to how often you can withdraw money.
You are typically limited to not withdrawing from these accounts more than six times each month.
Consider These Types of Bank Accounts
The types of bank accounts for you are a combination of your financial status and banking needs. If you are not sure about what account makes the most sense for you, consider meeting with a bank representative to go over your options.
Before opening an account at a bank, be sure you have a clear understanding of the fees you may receive while it is open. Avoid picking a bank account that has a high amount of monthly fees that a bank will not waive.
To read more on topics like this, check out the Budget category
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