Embedded Files
Bank accounts help you store, manage, access, and grow your money safely. But what are the different types of bank accounts, and how do they work?
Checking vs. Savings
Checking vs. Savings
A checking account is used for daily spending. It has easy access to money, meaning you can take money from it anytime, but it likely does not earn interest in the same way a savings account would.
Typically, checking accounts are used to:
Pay Bills
Make Purchases
Take Out Money
On the other hand, a savings account is a long term place for your money, and is used to set it aside when it is not needed. Savings accounts usually earn interest -meaning you earn a specific percentage each month or year- and is less frequently used for spending.
Typically, savings accounts are used for:
Emergency Funds
Savings Goals
Grow Money Passively
Other Accounts
Other Accounts
In addition to checking and savings accounts, there are other accounts which you can open for various purposes. You won't need these when you're just getting started, but it's good to be aware of them anyways.
Certificates of Deposit (CDs)
Certificates of Deposit (CDs)
You put money into an account for a fixed period of time
Earn higher interest than a regular savings account
You usually cannot take out money early without paying a penalty
Student Accounts
Student Accounts
Designed for younger users or students
Often have fewer fees and lower minimum balances
It is important to know that you do not need every type of account. For most people starting out, a checking account and a savings account is enough. As your financial situation grows, you can explore other account types based on your needs.
Page updated
Report abuse