What Are The Different Types Of Bank Accounts? -Checking And Savings Accounts

Nowadays, many types of financial institutions exist and these institutions offers different types of services. So before we proceed to understand the different types of bank accounts, it will be essential to know what a bank is;

A bank is a financial institution regulated at the federal level, state level or Both. The primary role of a bank is to take deposits and make loans. 

Banks and the financial services industries play an essential role in the economy because they enable consumers to borrow money, make investments, save for the future, and manage routine chores such as making deposits and paying bills.

Some types of banks are: Central banks and commercial banks. Also we have credit unions, and insurance companies.

Most banks in the united states are insured by the Federal Deposit Insurance Corporation(FDIC). In the event that a bank fails, the FDIC will insure deposit accounts up to certain restrictions. The current FDIC coverage limit per depositor, per account ownership type, and per financial institution is $250,000.

In this article, we provides you with information on: the different types  of bank accounts, the differences between a checking account and a saving account and types of bank accounts base on accessibility.

A bank account is a record maintained by a bank, in which it records an ongoing series of cash inflows and outflows on behalf of a customer.

Before you open an account, it is essential for you to understand the kind and type account, the advantages and disadvantages involved in it. 

Types of Bank Accounts [Checking and Savings Accounts]

As seen earlier, a bank is a financial institution regulated at the federal level, state level or Both. Basically, there are two main types of bank  accounts:

• Checking accounts
• Savings accounts

What Are The Different Types Of Checking Accounts?

These are the most basic and useful types of  bank accounts. They are designed to have an unlimited number of deposits and withdrawals and each withdrawal may be subjected to fees payment.

Some checking accounts do not allow for interest interest to be paid on any residual balance in it. There is no restriction on the amount of cash held in a checking account or the length of time money is to be held.

The different kinds of checking accounts offered by banks and credit unions. some include:

1. Traditional checking account: These types of bank account offer checks, debit or ATM card and online bill pay options. You can waive a monthly maintenance fees by maintaining a minimum balance, some traditional checking accounts don't charge fees. These accounts may also offer overdraft protection.
2. Premium checking account: This bank account typically offers perks that you had otherwise have to pay for. These may include a free safe deposit box, free personal checks, free official checks, free money orders and fees waived on some or all out-of-network ATMs. You are required to maintain a higher minimum balance on a premium account.
3. Student checking account: Owned by students of age 18-23 ages. Might not require a maintenance fees for those who qualify. They may also offer overdraft forgiveness, ATM free reimbursement, free checks or other perks.
4. Senior checking account: This type of bank account is own by people of  55 years and above. They may offer free checks, waived monthly maintenance fees and other perks beneficial to those who are retired or living on a fixed income.
5. Interest-bearing account/Call deposit account: There are are variations on the checking account concept that are interest bearing. However, they have more restrictions that a standard checking account (such as a maximum number of check payments to be issued each month) and may require a minimum balance
6. Zero-balance account: This account is funded only enough to meet the requirements of checks being presented for payment. By keeping the funded balance low, a company can keep most of its cash in an interest-bearing investment.

What Are The Different Types of Savings Accounts/Deposit accounts?

These kinds of bank accounts are storage accounts and thus no or few checks are written against these accounts. Depending on the type of savings account, there may be restrictions on the minimum quantity of cash that must be retained in the account, as well as the minimum time period for which the cash must be held. 

With savings accounts, you most notify your bank before going to do a withdrawal and the bank pays you interest base on the amount of money you have saved and the time frame.

Various types of savings accounts exist some of with include:

1. Traditional or Regular savings account: This type of bank account is good for people who need to save money  for a short or long term and are not as concerned about getting the best interest rate, expressed as the annual percentage yield(APY). This type of account allow you to make up to six months withdrawal(not  including withdrawals with ATM, in-person or at a branch) before incurring a penalty.
2. High-Yield savings account: it is good for people to earn a more competitive rate on savings while minimizing fees. typically found at online banks, neobanks and online credit unions, offer a higher APY compared to regular savings accounts.
3. Money market accounts: It is good people who want to earn interest on savings while having more options for accessing their money. It combine features of a regular savings account with that of a checking account.
4. CD(certificate of deposit) account: it is good for people who want to earn comparative rates and will not need to access their savings right away. these are time deposit, meaning you agree to leave your money in the account for a set period  to earn interest without withdrawal.
5. Cash management account: it is good for people who want to keep cash available to invest in their brokerage or retirement account. this account does not specific designed for saving.
6. Specialty Savings account: Good for people who want accounts tailored to specific savings goals.