I think banking is so confusing. Just today I had to go in for something and honestly I’m still not sure what they were talking about. Several years ago I sat down with a friend and had them explain all the different account and how they could benefit me. The more educated about these things, the more you could potentially make money.
Here is a quick summary of the most popular kinds of bank accounts and what they mean for you.
There isn’t much complicated about these accounts. These are intended for you to simply save and have money in the bank. Savings accounts will have interest rates that vary from bank to bank. They aren’t huge interest rates, but if you want your money in an account that can make you a little money, this is a good idea. You can get to this money quickly and usually without penalty. Some banks will ask you to carry a certain balance in your account though.
Basic checking accounts
Most regular checking accounts don’t allow for interest. It’s simply a way for you to shuffle your money between yourself and wherever you spend money. You can write checks from it and withdraw cash.
Interest bearing checking accounts
These accounts have more rules, generally cost more than regular checking accounts, but the interest rates are higher. If you are a person that carries higher balances at all times, these are worth looking into.
Money Market Deposit Accounts
These accounts invest your money into things like treasury bills. It pays interest based on current interest rates in the money markets. You do have to have high balances anywhere from $1,000 and up to $10,000 to do sone of these. You have limited check writing capabilities and there are fees if your balance drops below a certain level.
Certificates of Deposit
These accounts have you place money into them with the expectation that you don’t plan to remove it for a long time. These time periods can be anywhere from three months to six years. These have a higher interest rate than the other accounts and that rate goes up when you choose a longer duration for the money to be int he account. There is a large penalty for early withdrawal
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