5 Types of Bank Account in Details - Easy Explanation

Before opening a bank account, you must know about the categories and all the pros and cons of the bank account. If you don’t know about it, you may have a great regret after opening an account.

At first, it is compulsory to know which kinds of benefits are you seeking for and does it have any relation with your purpose. So, today in this informative short blog post, we are going to discuss several types of bank accounts. Generally, there are five types of bank accounts.

  1. Savings accounts
  2. Basic checking accounts
  3. Interest-bearing checking accounts
  4. Money market deposit accounts
  5. Certificates of deposit

Savings Accounts

The savings account is designed to help people to save money. As well it carries an interest rate which is better than checking account. Its' interest rate is low comparative from other types of account. Often this type of account does not come with the check. It is the most common account all over the world.

Basic checking accounts

This type of bank account is the most simple and prevalent account in the world. No higher interest is offered in this type of bank account. The holder of this checking account can check and use a debit card to withdraw money or transfer money from one account to another account. Bank can charge fees each time when you check your account.

Interest-bearing checking accounts

The main difference between only checking accounts and interest-bearing checking accounts are added services and added interests. However, interest-bearing checking accounts often have a higher deposit.

Money market deposit accounts

This type of account is also known as MMDAs. Money market deposit accounts account requires a higher minimum deposit. It serves higher interest rates. The bank invests the money into short-term debt to the clients of the bank. A limited number of money checks are available on this type of account. And bank charges a fee for this checks.

Certificates of deposit

In short form, this type of account is known as CDs. This type of account is known to be as a relatively long-term of investments. The account holder agrees to put a certain amount of money for a specific long time. It may be 3-7 years. This type of account generates the highest interest rate.


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