Types of Bank Accounts

There are various types of bank accounts that serve different purposes. Experts recommend putting your money in an account that is in line with your financial goals and gives you access to the right tools for saving and spending. This not only helps you maximize the return you get but also minimizes fees and helps manage your money conveniently. Some of the most common account types offered by financial institutions are:

Savings Accounts

Good fit for- First-time account holders like teens, or adults looking for an easy way to earn interest on their savings or park their cash in a safe space. 

Savings accounts are usually the first type of bank account one opens. Since the deposits made in these accounts earn interest over time and grow your money, it is a good fit for almost everyone who needs to set money aside for future use. Parents who want to encourage their children to establish a habit of saving can open a savings account under their name. They are relatively easy to use and keep track of. 

Checking Accounts

Good fit for- People who like to keep relatively small balances like their paychecks for everyday use and payments and manage their monthly expenses.

Checking accounts are popularly used more for everyday spending. They offer great conveniences like linked debit cards, easy ATM withdrawals or check-writing abilities that make regular payments easier to manage. Online growth has also given rise to online bill-pay services that further streamline checking accounts payments.

Although traditional checking accounts don't earn interest, one can always opt-in for interest-bearing checking accounts and earn extra interest on top of what they get from a savings account.

Retirement Accounts

Good for: People who want to save with the goal of retirement in mind, save on taxes and earn interest. 

As the name suggests, retirement accounts are used to set aside money for your golden years. Most banks offer Individual Retirement Arrangements (IRAs) that make you eligible for tax advantages.

You don’t have to pay income tax on the growth of your IRA contributions each year, but you'll have to pay taxes on withdrawals later. 

These accounts allow you to invest money in the stock market, creating greeting growth potential than the traditional checking or savings accounts.