Decide Which Type of Bank Account to Open
There are many banks offering various different types of accounts. One account which may be right for one person may not be right for another. With the current state of the economy, it is more important now than ever that your bank account works for you, and that you are getting the most out of your account.
Steps
- Consider opening a basic checking account. A checking account is an account that you can make both deposits and withdrawals on a regular basis, and there are generally no transaction restrictions. You will probably want to open a savings account with a checking account as they earn little to no interest, so your money will not grow. A checking account also offers you the flexibility of writing checks out of the account to pay for things like your phone bill, cable bill, etc.
- Consider opening a Money Market Savings account. A Money Market Savings account is similar to a checking account in the sense that it allows you the flexibility to write checks out of the account. However, a Money Market Savings account will typically have transaction limits, such as only being able to write out a certain number of checks per month. The benefit to opening this type of account is that you will earn a higher interest rate than you would on a checking account. Interest rates on a Money Market Savings accounts generally go up in tiers, and you will earn interest based on the total deposit balance you are carrying in the account.
- Consider opening a regular Savings account. A regular savings account is a great option for just about everyone. You can also make regular deposits and withdrawals without transaction restrictions when you have a Savings account. A Savings account also offers you the benefit of earning interest, just like a Money Market Savings account would. However, a Savings account earns a regular interest rate that does not vary, even if your deposit balance changes. This is a great way to save money for kids that may be saving up for college, a car, or their future house.
- Consider investing in a Certificate of Deposit (CD). A certificate of deposit will generally earn you a higher interest rate than any other type of account. However, there are downsides to investing in a Certificate of Deposit. First, you will need to commit to having your Certificate of Deposit for a certain time period - generally anywhere from 1 month to 10 years, or more. The longer you choose, the higher the interest rate you earn. Secondly, if you choose to withdraw money before your term if up (maturity date), you will be subject to penalties which will result in earning less money.
- Speak with an investment representative to discuss alternative options. If none of these accounts are appealing to you, or you have a large amount of money that you are looking to invest, consider speaking with an investment representative to discuss alternative account options. Generally when you look to invest with an investment representative, you will have a higher risk of loss, but you may also have the chance of earning more money from your investment.
Tips
- Sit down with a banker to discuss what options are the best for you. A banker will be able to view your financial portfolio and review with you what your best options would be.
- Open multiple accounts. For many people, there will be more than one type of account that will be right for them. You want your accounts to work for you, and earn you money.
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