Learn the 4 Most Common Types of Bank Accounts
Not all bank accounts are created equal. Some may not have a minimum balance requirement or levy fees—win! Others may penalize you if you withdraw money at the wrong time.
Everyone should start with basic checking and savings accounts. Then you can diversify into several bank accounts, where your money can begin to stack up.
1. Checking Account
The checking account is the most basic sort of bank account. Consider it your home base. For most people, it’s where their paycheck is deposited, where their bills are paid, and where they keep the money they need urgently.
Checking accounts can be opened at a traditional or online bank, including a debit card. It functions similarly to currency. However, you no longer need to carry a wad of cash. It can alternatively be deposited into your checking account.
You can then use your debit card at the grocery shop or gas station. The money is usually withdrawn from your checking account immediately.
Depending on the merchant, some transactions may take a few days to process. In that situation, you want to avoid spending the money twice. More on that in a minute!
A checking account also simplifies budgeting and bill-paying. When you set up automatic bill pay, payments are automatically withdrawn from your checking account when they become due. There will be no more scrambling for a stamp and an envelope to mail in your mortgage payment or forgetting to pay the electric bill. And, if you use a budgeting app, you can link your monthly budget to your checking account, allowing you to quickly track all of your expenses and stay on track toward your financial objectives.
