Our pick for a savings account: Synchrony High Yield Savings
- Earn customer rewards
- Free ATM card
- No minimum balance
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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.
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.
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.
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.
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.
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|
Here are a few features to keep in mind when finding the best type of bank account for your needs:
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.
|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.
|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.
|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.
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.
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|
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.
Looking for a bank in California, New York and Texas? Use one of these lists to explore your options:
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.
Having a bank account can help you manage your everyday finances and keep track of your money. Benefits of owning one are:
Here are two mistakes to look out for when selecting a bank account:
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.
Click any company logo below to compare more bank accounts from that brand.
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.
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.
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.
Here are some common measures banks take to protect your sensitive information:
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.
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.
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.
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.
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.
CIT Savings Connect combines aspects of a checking and savings account in one product.
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