Every bank offers different types of accounts with different features. Sometimes it can get confusing whether to choose a basic checking account or an account that will help us earn a return; or whether to go in for a combined account or the larger return of a money market account. To decide this, it is first essential to identify and comprehend the differences and features of the primary bank accounts. They are explained as follows –
Checking account –
This account gives us an easier access to our money for our day to day transactions and helps us keep our cash safe. We can use checks or a debit card to pay bills or make purchases. Most banks provide various options to help us to put aside some monthly service fees. We could compare the different checking packages and match it with the services we need. San Francisco Banking is well versed in providing services.
Savings account –
This account helps us accumulate on interest on the funds we intend on saving for the future. Rates of interest can be calculated on monthly or annual basis. Savings accounts can differ depending on the minimum opening deposit, monthly service fees or interest rates.
Certificate of Deposit –
Certificate of deposits allow us to put in our money at an interest rate for a determined period of time. They usually have rates higher than the conventional savings accounts as the money we deposit is tied up for the life of the certificate. This can be anywhere from a few years to a few months. An early withdrawal might attract penalties.
Money market account –
These are similar to savings accounts. However, they need us to uphold a higher balance in order to avoid a fee. The rates of these accounts differ depending on the money markets. They can also have tiered interest rates which provide favorable rates depending on the balances. Some accounts also allow us to write checks against our funds. But this is quite limited.
Individual Retirement Accounts –
IRAs allows us to save for our retirement. These accounts are of two types: the Roth IRA and the traditional IRA. In the Roth IRA funds can be taken out without any tax-free in several situations. In traditional IRAs contributions are tax deductible. Both these accounts have limits on contributions. It is best to consult a tax consultant before deciding on an account.
It is best to understand the kinds of accounts banks offer so as to decide which type would be most suitable for our needs.