What Bank Accounts Do You Need?

Understand the Basic Bank Accounts

When you first start managing money , you may not be sure which accounts are the best ones to open. Everyone should have at least two accounts, a checking and a savings account. As you begin to save more money, there are additional savings accounts that you may want to consider opening because they offer a higher interest rate. Once you begin investing money, some of the money in your savings accounts at the bank should be transferred into your investing accounts. As you consider the types of accounts you need, you may also want to consider switching to an online only bank for some accounts like your savings account. You may be able to earn a higher interest rate this way. You may also consider using a credit union, which offers the same protection as a bank but with lower fees. 

A Checking Account

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A checking account is essential to managing your money effectively. You can get by on a cash only basis, but it makes it much more difficult to pay your bills. A checking account will allow you to pay your bills and easily access your money. When you open your checking account, you should also get a debit card. This can be used at the ATM, and at stores. It can also be used to make online purchases.

If you are trying to get your business finances separate from your personal expenses, you may want to open multiple accounts. You can open multiple checking accounts at the same bank or you can choose to have accounts at different banks. if you do have more than one account, be sure to keep the accounts separated because you may accidentally overdraw one if you use it by mistake. It can help to have different colored debit cards and checks.  More

A Savings Account

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A basic savings account is another option that you may consider. You should have at least one account that you can save money in separately from your checking account. One of the advantages of a savings account is that it has a lower minimum balance requirement. It is the best choice for someone just starting to save money. One of the disadvantages is that the interest rate is a little lower than other account options. Another option is to consider opening an online savings account since the interest rates are often higher than traditional bank accounts.

For many people, a savings account is their first bank account. You can access your money at the ban or through an ATM card. If you have made mistakes and have a ChexSystems report, a savings account may be your only option. It can be difficult to manage your money with just a savings account.  More

A Money Market Account

Is opening a money market account the right move for you?
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A money market account is another savings account option. A money market account offers a higher interest rate. If you have one through the bank, it is guaranteed by the FDIC. You can right checks off this account. It has a higher account minimum balance, and if you cannot maintain this balance you will be charged fees. The higher interest rate is likely not worth the fees, if you cannot steadily maintain the minimum balance requirement. A money market account is a great option for emergency funds. More

Certificate of Deposit

Certificate of Deposit
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Certificates of Deposit or CDs are another option available at banks. This account offers a higher interest rate, but you lock the money in for the length of the CD. The interest rate may stay low when interest rates actually rise. Additionally ,you cannot withdraw your without taking a penalty until the period of the CD is complete. This is a good option when saving for something specific or for a small portion of your emergency fund. More

Overdraft Protection

Overdraft protection can stop you from overdrawing your account.
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You may also open an overdraft protection or a cash reserve account. This account will protect you from overdrawing your checking account. One form of overdraft protection is attaching a line of credit to your account. Another option is to have your savings account connected as your overdraft account, and money will automatically be transferred over. It is important to realize that you should not utilize these services unless it is an emergency.

Banks user overdraft protection in order to make money in fees to the customer. Overdraft protection is not the same as a cash reserve account. The overdraft protection will charge a fee for each item that the bank pays for you once you are overdrawn. There may be additional fees for carrying a negative balance. 

A cash reserve account is a line of credit that is tied to your checking account. You are charged a transfer fee (usually this is small around $5.00 per $100 transferred) and then interest on the money that you owe. The interest rate is similar to the rate you would be charged for a credit card.  More