When it comes to taking care of your regular banking requirements, you have many options. And even if you probably already have some knowledge of them, a side-by-side comparison of the most popular account kinds may help you decide which ones are best for you. Despite certain similarities, checking, savings, and money market accounts are each best used for a distinct purpose due to their differences.
To choose which account — or accounts — to use, it’s critical to comprehend the features and benefits of each type.
Deposit accounts include checking, savings, and money market accounts.
Deposit accounts include checking, savings, and money market accounts. It indicates that when you deposit money in a bank, the institution maintains it in trust for you and, in most cases, pays interest on the sum. All three of these account types are comparable in this regard. Their accessibility, earning potential, and other characteristics vary, nevertheless.
This is a quick comparison of the three different types of accounts:
Savings accounts are useful for storing cash since they also pay interest.
You are aware that keeping your funds in a jar in the kitchen cabinet is not the best idea. This is due to the fact that you are losing out on the money’s potential for profit. Your savings account is a fantastic place to keep your money for short-term savings objectives since it produces interest, frequently at higher rates than checking or money market accounts.
A savings account might not be your greatest option, though, if you frequently need access to your money. Even though it is simple to transfer money into and out of a savings account, there are regulatory restrictions on the total number and kind of withdrawals that can be made during a statement cycle. You are permitted to make as many deposits as you like, but federal legislation only permits six transfers and certain telephone and electronic withdrawals (excluding ATM withdrawals, if the account comes with an ATM card).
Easy access is the key to checking accounts.
Checking accounts are excellent for managing money for regular purchases and paying payments, even though they typically don’t offer high APYs (annual percentage yields). You may usually access your money from a checking account in a number of different ways. With most banks, you can set up online bill payment, utilize debit cards and make checks. Also, there are options for wire transfers, cashier’s checks, and ATM withdrawals.
Find out more about our Interest Checking Account.
Savings and checking account characteristics are combined in money market accounts.
A money market account combines the advantages of both a checking and a savings account, similar to a hybrid checking and savings account. This implies that, if available, you can still use your debit card and write checks while earning a wonderful rate on your balance.
Although there are restrictions on the number of checks you can write and withdrawals you can make per statement cycle, access is still more flexible than what you receive with a savings account. Because of this, money market accounts are excellent for saving for items like an emergency fund or a home.
All three of these account kinds are secure for your money.
Security is a major benefit of keeping your money in deposit accounts like money market accounts. The Federal Deposit Insurance Corporation will guarantee checking, savings, and money market accounts at banks that are FDIC members up to the maximum amount permitted by law. This guarantees that, in the unusual case of a bank failure, you won’t lose any money.
Which kind of account is the best fit for you?
Depending on your goals for the account, you should choose the appropriate sort of account. Furthermore, there is no prohibition to opening all three. You might need a checking account to manage all the bills, a savings account to help you accumulate a short-term cash reserve, and a money market account for travel or home repair costs. Also, linking your accounts together makes it simple to transfer money and stay on track with your savings objectives.
Great rates and features are available from online banks.
If you haven’t already, you might want to look into the advantages that come with using online banks. With an online bank, you may conduct business whenever and wherever you have access to the internet. The finest online banks provide a range of services, including outstanding customer support, savings, checking, and money market accounts. Online banks also don’t have the overhead that traditional banks do, so they can offer you reasonable rates in exchange for their cost savings.
