The best checking account and savings account for you will depend on your needs and priorities. When choosing a checking account, you need to consider account fees and minimum balance requirements. When selecting a savings account, you need to consider interest rates, minimum balance requirements, and how often you can access your funds. Financial institutions offer a variety of checking and saving account options so it’s good to know the differences.
Checking Accounts are used for your daily banking needs such as depositing funds and paying bills and offer multiple ways to access your funds through personal checks, ATMs, and debit cards. It’s important to monitor your balance and insure you don’t go below the required minimum balance to avoid costly overdraft fees. You could be assessed several times per day depending on the number of transactions that settle to your account. Shop around for an account that charges no monthly maintenance fee, has no required minimum balance, has no or low ATM transaction fees, and has a reasonable overdraft policy. Listed below are the different types of accounts to consider:
- Basic Checking Account – This account is for when you have only a small amount of money in your account on a regular basis. If you go below the required minimum balance you may be assessed a fee.
- Interest-Bearing Account – This account pays interest but usually has a higher required minimum balance to maintain.
- Express account – This account best for banking through ATMs, cellphone, or online and the fees are usually low.
- Student Account – Some financial institutions offer special checking account deals to students, that include low monthly fees, free checking, and no minimum balance requirements.
Savings accounts provide a safe mechanism for securing funds for future use, while earning interest. When choosing a savings account, you should think about when and how often you’ll need to access your money. You should only use a savings account for funds you intend to access infrequently. Listed below are the typical saving methods offered by most financial institutions:
- Basic Savings Account – This account usually pays a low interest rate and provides timely access to your funds.
- Money Market Account – Provides a higher interest rate but requires a large minimum balance to open and restricts the number of withdrawals within a certain time period.
- Certificate of Deposit (CD) – You give up access to your fund for certain time period, usually three months to a few years, to earn a higher interest rate. If you take funds out before the end of the term, you will be assessed an early withdrawal penalty.