Customers visiting financial institutions become acquainted with to a plethora of account options. Whether a current account, credit card account, deposit account, savings account, or time deposit account or others, for as long banking institutions have been around they’ve enabled financial transactions, savings, and lending.
While most customers have at least two types of banking accounts, several have multiple, where they entrust their funds to banks for the purpose of accruing, holding, or processing wealth. Nonetheless, there are still many unknown types of accounts that are available through credit unions and different banks. Here is a closer look at different types of banking accounts:
Checking accounts offer services at an affordable cost. You should be able to perform basic tasks, such as writing checks, but checking accounts often lack the special features found in other accounts. You will not earn any interest and you may have to follow guidelines, such as only writing a specific number of checks per month.
With a savings account, you will be able to make deposits and withdrawals. Savings accounts do accumulate interest. You will likely receive a statement every few months so that you can have a clear idea of any recent transactions. You may be charged a fee if your balance gets too low.
Certificates Of Deposit
When you open a Certificate of Deposit, you are agreeing to hold the money in your account for a specific amount of time that could last anywhere from months to years. Because you will be unable to withdraw the money, CD’s have a higher interest rate than many other types of accounts. If you have to make a withdrawal before the end of the allotted time period, you could face a substantial penalty.
Transactional Deposit Account
Transactional deposit accounts are commonly seen throughout the USA. These accounts allow financial transactions to occur without any restrictions. Your money is in liquid form.
With a pre-payment account, you can complete transactions without having to reveal any of your financial banking information. There is a link to your account which allows you to complete transactions without having to load the money in advance.
Money Market Account
With a money market account, a bank can take your money and invest it in safe low risk things, such as bonds or treasury notes. Most banks will require you to have a substantial balance before opening a money market account.
Individual Savings Account
An ISA allows you to set aside a specific amount of money for a good interest rate. You will also avoid being taxed. Your savings are not allowed to be used as collateral for a loan. The amount you can save has a limit, after which you will not receive any more interest.
Peer To Peer Lending Account
With this type of account, you are lending money to the public with the understanding that they will pay back the amount with interest. Most of these accounts come with a contingency fund that helps the lenders.
Low-cost, numbered, negotiable order of withdrawal and joint accounts are the other accounts customers in the U.S. might utilize. If you’re interested in learning more about banking and savings, stay tuned!