Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Types of bank accounts for your financial needs
Compare five types of accounts that can help you manage your money.
This article was reviewed by Marguerita Cheng, a member of the Finder Editorial Review Board and award-winning advocate for ethical financial planning for over 20 years.
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. However, this policy is temporarily suspended due to the coronavirus pandemic.
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.
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 which type of bank account is 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, 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 savings
Synchrony High Yield Savings
Min. opening deposit
- Strong APY. Your savings grows even faster with a 0.4% APY that's compounded daily.
- Free ATM card. Unlike other savings accounts, this one comes with an ATM card for easy withdrawals. Plus, Synchrony refunds up to $5 in non-network ATM fees each month.
- No fees. There's no monthly maintenance or ATM fees.
- Limited transactions. Typically, you can't make more than six outgoing transactions a month without running the risk of having your account closed. But due to the temporary suspension of Regulation D, this policy could be on pause.
- Daily withdrawal limits. To prevent fraud, you can't withdraw more than $1,000 from ATMs and $500 from point-of-sale retailers a day.
- One branch. Synchrony's only branch is in Bridgewater, New Jersey, so you'll need to be comfortable managing your account online if you live outside this area.
|Minimum to earn interest||$0|
|Monthly transaction limit||6|
|Fee per transaction over limit||$0|
For more accounts that fit your goals, compare our list of best savings accounts.
Best overall bank account for money market saving
CIT Bank Money Market
Min. opening deposit
- Low opening deposit. You only need $100 to open a CIT Bank Money Market account, which is low considering most money markets have opening deposits of $2,500 or more.
- Minimal fees. CIT Bank doesn't charge anything for monthly maintenance, online transfers or incoming wires.
- Competitive APY. You'll earn 0.45% interest on your total account balance. You don't have to meet any minimums to qualify.
- Low transfer limits. People Pay and PayPal transfers are limited to $50 a day, but you can electronically transfer up to $2 million a day.
- No live chat support. CIT Bank doesn't offer live chat as a support option, which is unusual for an online institution.
|Minimum to earn interest||$0|
|Monthly transaction limit||6|
|Fee per transaction over limit|
For more accounts that give you flexible access to your savings, compare our list of best money market accounts.
Best overall bank account for checking
Capital One 360 Checking
Min. opening deposit
- 0.1% APY. This account earns more interest than most traditional savings accounts, but there are stronger rates out there.
- No fees. You won't pay any monthly maintenance, foreign transaction or ATM fees with this account. But ATM owners may charge a fee when you use non-network ATMs.
- Flexible overdrafts. Capital One gives you four ways to avoid overdraft fees: auto-decline, next-day grace, free savings transfer or an overdraft line of credit.
- Large ATM network. Use your debit card for free at over 39,000+ Capital One and Allpoint ATMs worldwide.
- Not 100% free. Although you won't pay routine fees charged by some banks, Capital One will charge you $25 for above-and-beyond services like overnight card replacements and stop payment requests.
- Expensive outbound wires. It's free to receive domestic and international wire transfers. But you'll pay $40 for each domestic wire transfer you send.
- Possible credit check. If you choose an overdraft line of credit as your overdraft protection option, Capital One will do a hard-pull on your credit.
|Account fees||$0 monthly|
|Can the fee be waived?||
|Insufficient funds fee||$9|
|ATM transaction fee||$0|
|Paper statement fee||$5|
|Wire transfer fee||$40|
|Foreign transaction fee||0%|
For more accounts that fit your spending lifestyle, compare our list of best checking accounts.
Best overall bank account for CDs
Marcus by Goldman Sachs High-yield CDs
Min. opening deposit
- Several term options. Lock your money away for as little as six months or as long as six years.
- 30 days to fund account. Most banks give you 10 days to fund your account. But Marcus lets you make as many deposits as you want for your first 30 days.
- Strong APYs. Marcus offers consistently high rates for both its short-term and long-term CD options, making it an ideal choice for any CD length.
- 10-day rate guarantee. If Marcus raises its rates within 10 days of you opening and funding your CD, you'll automatically get bumped up to the higher rate.
- No branches. Marcus by Goldman Sachs High-yield CDs is online-only, so you can't visit a branch for in-person support. But you can call customer support daily.
- No partial withdrawals. If you need to dip into your CD before it matures, you'll have to withdraw the full balance.
- Early withdrawal penalties. Like most banks, you'll pay a penalty fee if you withdraw money before your CD matures. But Marcus has a no-penalty CD option available if you're worried about needing your money before it's time.
For more accounts that fit your savings goals, compare our list of best CDs.
What’s changed in 2021?
We added CIT Bank Money Market as the best overall bank account for money market savings because it has a low opening deposit, no fees and a competitive APY.
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
|Digital nomad or traveler||Digital bank account||Typically two-in-one spend and save accounts that are chockfull of budgeting tools and auto-save features 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.
Compare bank accounts by state
Looking for a bank in California, New York and Texas? Use one of these lists to explore your options:
- Best banks and credit unions in California
- Best banks and credit unions in New York
- Best banks and credit unions in Texas
What’s a bank account?
A bank account helps you save for the future, pay bills, spend conveniently, transfer money where you need it and get cash when you want it. Financial institutions offer bank accounts to give you a secure location to hold your money.
The benefits of owning a bank account
Having a bank account can help you manage your everyday finances and keep track of your money. Benefits of owning one are:
- A convenient way to organize your money. For example, paying bills, receiving your income, paying for goods and services or sending money to someone else.
- A safe place to keep your money. This is especially helpful during uncertain economic climates — the FDIC offers a guarantee on deposits of up to $250,000 per person, per institution.
- A place that records your transactions. When applying for a loan, lenders can refer to your transaction records to assess how well you can save money. You can also see where you’re spending most of your income.
- A place to build your assets. Money held in your transaction account is easy to access — by linking it to a savings account, you can also earn interest.
What to watch out for?
Here are two mistakes to look out for when selecting a bank account:
- Choosing the wrong type of account. Each type of account serves a very specific purpose. Not choosing the right one could result in paying unnecessary fees or penalty charges.
- Not having the right features. Look closely at each account to ensure that it has the features you need to make your banking needs easier.
What’s the difference between bank account types?
Paying bills or building your nest egg?
Compare savings options, interest rates and balance requirements.
The key differences and how they can affect your ability to save.
The right choice depends on how often you use it and whether you want to earn interest.
Just some of the brands we compare
Click any company logo below to compare more bank accounts from that brand.
How many bank accounts should I have?
The number of bank accounts you open depends on your personal financial goals. Most people have one checking account and one savings account, but there’s no limit on the number of accounts you can have. Opening multiple accounts is beneficial for budgeting purposes or to help you reach specific savings goals, but it can complicate your finances as well.
As your savings account balance grows, it may make sense to explore other savings options such as certificates of deposit (CDs). CDs generally offer higher interest rates than standard savings accounts, allowing your money to grow more quickly. And if you’re looking for a hybrid between a checking and savings account, you can consider a money market account or an interest-bearing checking account.
Resources to open and close a bank account
The specific steps involved when opening or closing a bank account may vary slightly from one institution to the next, but they generally follow the same route.
Skip waiting at the bank branch.
Close your account and find a bank that meets your needs.
Joint accounts are best for people who are working towards a similar financial goal together.
Why most of us are unwilling to change banks
We don’t want to change banks for a number of reasons. If it’s not our priority to make a change, it may be because we’re getting exactly what we need from our bank or because it’s too much of a hassle to switch. If you’re satisfied with the services your bank provides, or even just loyal to the company you’ve been with for years, you might feel less inclined to change.
How do banks protect my security online?
Here are some common measures banks take to protect your sensitive information:
- Investment in safety. Banks spend millions of dollars to protect your money, mainly because they are required to refund money to those who have been defrauded.
- Secure Socket Layer (SSL) encryption. This gives an added layer of protection from hackers.
- Password security. You’ll often find that your password needs to be a certain length and contain certain characters.
- Encrypted personal information. This means that the lock symbol is displayed in your browser, and the information coming in and out is scrambled.
- Log-in security. You’re locked out of your account after too many failed log-in attempts. Plus, you’re auto-logged out after a few minutes of inactivity and there are firewalls in place so only authorized people can log in.
- SMS codes. To ensure you say who you are, banks will also send codes to your phone to authorize new transactions.
What should I do if someone is trying to take money from my bank account?
If you’re suspicious that someone is trying to take money from your account or possibly attempting to steal your identity, speak to your bank right away. Ask exactly what information would have had to be provided to your bank for them to be able to access your account. If you’re worried about identity fraud, speak to your local police station — they may request that you change your driver’s license.
Which is the safest type of bank account?
Savings accounts, checking accounts, money market accounts and CDs are all safe as long as they are insured by the FDIC or NCUA. Most will cover you up to $250,000.
Quick tips for using everyday bank accounts
- Take advantage of cash back opportunities. If you’re paying for purchases using your debit card, ask for cash out at the same time rather than withdrawing at an ATM. This counts as one transaction, not two, and lets you avoid any potential ATM fees.
- Monitor your transaction history. If your account has a limit on the number of transactions you can make each month before fees apply, monitor your account regularly and try to work out ways to minimize your transactions where possible
- Bank securely with credit. When you make a purchase, should you choose debit or credit? By choosing credit, you’ll be activating enhanced security or the complimentary insurance policies offered on your card.
- Find ways to waive fees. If you’re currently paying a monthly account-keeping fee on your account, ask your bank what options you have for getting that fee waived. They may suggest opening a savings account, signing up for direct deposit or maintaining a minimum balance to get rid of that fee. They may also suggest a different transaction account that could end up suiting your needs better in the long run.
Should I open an international bank account, if I’m starting a job overseas?
Going with an international bank could help, but be mindful that in each jurisdiction the banks are under their local regulations and are separate legal entities. Depending on how strict they are in the country that you’re working in, it may not be worth switching to another bank. Some banks, such as HSBC or Citibank may be able to offer you worldwide assistance.
Using your bank account for international transactions
Is it possible to reverse a foreign exchange transaction on my transaction account? You will need the help of your bank in most circumstances, but if you have the supporting documentation then you should be able to reverse a foreign exchange transaction.
Is it possible to cash out an international check? Yes, some US financial institutions will accept an international check deposit, although the funds could take longer to clear and you may be charged international transaction fees.
Do foreign banks charge a fee to receive an international money transfer? Yes, there are foreign banks who will charge your recipient upon receiving funds from an international money transfer. Remember to take into account exchange rates and recipient fees.
Frequently asked questions
How much tax do I need to pay from the interest I’ve earned from my bank account?
The amount of tax payable depends on your income. The marginal tax rate is then calculated from there. See our tax returns guide for more information.
How do I find out what my bank account number is?
You can find this information on your most recent bank statement or by logging into your online banking account. Or you can call your bank directly.
Which banks accounts let me deposit money into my account with an ATM?
Most traditional bank accounts will allow you to use ATMs to deposit checks and cash. But some digital bank accounts may not allow for cash deposits, but you may have the option of depositing checks through a mobile app.
How do I transfer money to another bank account?
You can do this by visiting your nearest bank branch or using your financial institution’s phone banking service, but the simplest way to transfer money is through your online banking account. The exact transfer process varies depending on your bank, but you’ll typically have to select the account you want to transfer funds from, provide details about your recipient (their name and account number) and specify the amount that you would like to transfer.
Read more on this topic
How to find your routing number
Locating your bank’s routing number may not be obvious, but here’s where to find it.
Zeta Joint Card review
Zeta Joint Cards allow two people to share one account, but there are several drawbacks.
How to avoid Wells Fargo account fees
Here’s a breakdown of Wells Fargo’s common account fees and how to avoid them.
CIT eChecking account review
CIT’s eChecking account offers more interest than most physical banks, but it can’t compete online.
Bank5 Connect High-Interest Checking account review
The Bank5 Connect High Interest Checking account has a solid APY, but you’ll need to meet the minimum balance to earn interest.
BankPurely CheckingPurely account review
BankPurely plants a tree for every new account.
Quontic Bank High Interest Checking account review
This Quontic Bank checking account has a seriously competitive APY — 25 times the national average.
How to avoid Bank of America account fees
Bank of America charges various account fees, but you can avoid many of them.
Zions Bank routing numbers
Learn which Zions Bank routing number is the right one for your next transfer.
Wells Fargo routing numbers
Learn which Wells Fargo routing number is the right one for your next transfer.
Ask an Expert