Are you wanting to up your financial know-how? Do you need to rejuvenate and revamp your money-savvy? If so, then you’re in the right place.
The best place to start on your quest to become a financial guru is understanding one of the core financial institutions we have in world economies: bank accounts.
Although you probably already have a bank account, what you may not know is the different types of bank accounts that are available to you. In this article, we’re going to discuss each of these five common types of bank accounts so that you know which ones make the most sense for you to open.
1. Checking Account
The first and most common type of bank account that people have is a checking account. A checking account is one in which you can withdraw money at any time. It doesn’t collect interest, so this type of account essentially acts as a holding tank for you.
The checking account is also the one that your debit card will pull money from. Practically everyone needs access to a checking account. If you live in Idaho, check out one of the best checking account options here.
2. Savings Account
A savings account is exactly what it sounds like: an account where you save your money. This type of account is typically meant for you to house your long-term savings.
The average working professional will want to split up their wealth into various different assets: real estate purchases, investments, and just straight-up savings as well. The difference between savings and checking accounts is that money is not typically as immediately accessible as it is in a checking account. The flip side, however, is that a savings account will earn interest.
3. Certificate of Deposit
A certificate of deposit is a type of bank account where you deposit a fixed amount of money for a fixed long-term period. At the end of this period, you collect a certain amount of money in interest.
However, you cannot break the long-term period and use the money stored in the certificate of deposit unless you’re willing to forego the interest that you have earned.
4. Investment Retirement Account
An investment retirement account, or IRA, is a type of account that every working professional with an attitude to build wealth for the future will want to have.
Money deposited into an IRA goes straight into a managed investment portfolio. These accounts typically track the stock market and move up and down with stock market movements.
5. Brokerage Account
A brokerage account is an investment account for active traders. Those who have sufficient stock market knowledge to make their own trades and make decisions on how they want to manage their own portfolios should have a brokerage account to execute those trades.
Know the Different Types of Bank Accounts
With this guide under your belt, you should now have a far better understanding of the different types of bank accounts out there and which ones you should be taking advantage of.
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