Types of bank accounts for your financial needs
Compare seven types of accounts that can help you manage your money.
Choose a type of bank account
Bank accounts can go a long way in helping you reach your financial goals — whether that goal is to spend or save money. Here’s a breakdown of the five main types of bank accounts, so you can decide which is best for your needs.
1. Checking accounts
A checking account is designed for everyday spending, as there’s no cap on the number of deposits and withdrawals you can make each month. You’ll typically get a checkbook and a debit card so you can write checks or use your card to make purchases and withdraw cash on the go.
Most checking accounts don’t earn interest, but more and more interest-bearing options are starting to pop up. Perhaps the biggest drawback of a checking account is overdraft fees, which you may face if spend more money than you have in your account.
2. Savings accounts
As its name implies, a savings account is designed for saving. You earn interest on the money you keep in the account, but you typically won’t get an ATM card or checks. You’re also limited to six withdrawals a month per Regulation D.
3. Money market accounts
Think of a money market account as a savings/checking account hybrid. You get the benefits of a debit card and the ability to write checks, but you also earn the same competitive interest rate as you would with a savings account. On the downside, money market accounts are typically limited to six withdrawals a month and they may require deposits of $500 or more to get started.
With a certificate of deposit, you agree to lock your money away for a set period of time (usually anywhere from three months to 10 years). In exchange, you get a fixed interest rate that won’t change even if rates drop.
The only catch is that you can’t withdraw your money before your CD matures. If you do, you’ll pay early withdrawal penalties.
5. Retirement accounts
There are several different types of retirement accounts, such as 401(k)s and Traditional and Roth IRAs. Depending on the plan you use, you may gain access to tax breaks, employer matching and other special benefits to help you grow a sizeable nest egg for retirement. But there’s typically a yearly contribution limit, and you may pay penalties if you need to access funds early.
6. Brokerage accounts
A brokerage account is an investment account designed to buy and sell investment products, including stocks, exchange-traded funds (ETFs), mutual funds and bonds. Open a brokerage account with an investment firm, which can then place trades on your behalf. Some full-service brokerage accounts also offer personalized service and financial advice through a financial advisor.
7. Cash management accounts
With a cash management account (CMA), you can spend, save and invest in one fell swoop. CMAs have similar features to checking accounts and may come with an ATM card, a debit card and check-writing capabilities. They also function as a savings account by offering competitive interest rates.
And since nonbank providers, such as brokerage companies, generally offer cash management accounts, you may also be able to invest in securities using the same account.
VIDEO: Which bank account is right for you?
Compare different types of bank accounts
This table highlights the major differences between the five types of bank accounts:
|Checking account||Savings account||Money market account||Certificate of deposit (CD)||Retirement account|
|Best for||Those who want a basic spending account to pay bills, transfer funds and make purchases||Those who want to earn interest on their savings||Those who want a checking and savings hybrid that earns interest but is accessible||Those looking for a short-term investment with a locked in interest rate||Those who want to save and invest for retirement|
|Minimum deposit||$0 to $25||$0 to $100||$2,500 to $10,000||$500 to $10,000||Varies|
|FDIC or NCUA insured|
|Withdrawal limits||six a month||six a month||Can’t withdraw until maturity||Can’t withdraw until retirement age|
Things to consider when choosing the type of bank account for you
Here are a few features to keep in mind when finding the best type of bank account for your needs:
- Financial goals. Why are you opening a bank account? If it’s to spend money, go with a checking account. If it’s to save and build wealth, go with a savings account or CD. If you want a little bit of both, a money market account may fit the bill.
- Fees. Bank account fees include overdraft, ATM, daily balance, paper statement, and monthly maintenance fees. Look for an account with $0 monthly fees and read through the fine print to know how to avoid other associated fees.
- Minimum balance requirements. Some accounts come with minimum opening deposit requirements. Depending on how much money you want to keep in your account will help you determine which bank account you’ll want to open.
- Interest. Although savings accounts are a popular choice to grow your money, there are checking accounts that earn interest. Compare interest rates and how it’s compounded to decide which account is right for you.
- Banking needs. Everyone has unique banking needs. Some prefer convenience and flexibility, while others want to earn rewards and interest. The best bank account will help you manage your finances efficiently and reach your goals.
Best bank accounts by type
The best bank accounts are transparent and flexible and offer perks that help you reach your financial goals. When considering the best accounts, we looked at factors like interest rates, ease of use, ATM access, deposit requirements, monthly fees and additional perks.
Best overall bank account for money market saving
For more accounts that give you flexible access to your savings, compare our list of best money market accounts.
Best overall bank account for CDs
Marcus by Goldman Sachs High-yield CD
|Minimum deposit to open||$500|
For more accounts that fit your savings goals, compare our list of best CDs.
Best overall bank account for savings
Synchrony High Yield Savings
|Minimum deposit to open||$0|
For more accounts that fit your goals, compare our list of best savings accounts.
Best overall digital banking alternative
Aspiration Spend & Save Account
|APY||Up to 3.00%|
|Fee||From $0 per month|
|Minimum deposit to open||$10|
For more accounts that combine checking, savings and investment services under one product, compare our list of best cash management accounts.
Best overall bank account for checking
Capital One 360 Checking
|Fee||$0 per month|
|Minimum deposit to open||$0|
For more accounts that fit your spending lifestyle, compare our list of best checking accounts.
What’s the best type of bank account for me?
The best account for you will depend on what you plan on using it for, so it’s important to identify what you value in your banking experience.
This table highlights the type of bank account that may be right for you depending on your situation:
If you’re a…
Consider this account
|Traveler||Debit cards with international features||Free accounts with other perks to help you reach your goals|
|Couple||Joint bank account||An effective way for couples to manage their money together|
|Business owner||Business bank account||Makes it easy to manage cash flow and keep track of spending for tax and accounting purposes|
|Child||Kids bank account||Can help children learn how to manage their money, comes with parental controls and usually doesn’t have monthly fees|
|Teen or student||Teen bank account||Can help your child manage earned money and can teach them good habits they can carry into adulthood|
Compare popular bank accounts by type
Use the tabs on this table to sort through popular checking, savings, and money market accounts, as well as CDs. Sort each table by minimum deposit and APY to find one that’s right for you.