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.
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.
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.
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.
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 |
| Earns interest | |||||
| Monthly fees | |||||
| Minimum deposit | $0 to $25 | $0 to $100 | $2,500 to $10,000 | $500 to $10,000 | Varies |
| ATM access | |||||
| Checkwriting | |||||
| 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 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.
CIT Bank Money Market
Finder score
| APY | 1.55% |
|---|---|
| Fee | $0 |
| Minimum deposit to open | $100 |
For more accounts that give you flexible access to your savings, compare our list of best money market accounts.
Marcus by Goldman Sachs High-Yield CDs
Finder score
| 1-year APY | 4.90% |
|---|---|
| 3-year APY | 4.15% |
| 5-year APY | 4.00% |
| Minimum deposit to open | $500 |
For more accounts that fit your savings goals, compare our list of best CDs.
Synchrony High Yield Savings
Finder score
| APY | 4.75% |
|---|---|
| Fee | $0 |
| Minimum deposit to open | $0 |
For more accounts that fit your goals, compare our list of best savings accounts.
Aspiration Spend & Save Account
Finder score
| 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.
Capital One 360 Checking
Finder score
| APY | 0.10% |
|---|---|
| Fee | $0 per month |
| Minimum deposit to open | $0 |
For more accounts that fit your spending lifestyle, compare our list of best checking accounts.
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 | Features | Learn more |
|---|---|---|---|
| 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 |
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.
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. The benefits of owning one are:
Here are two mistakes to be mindful of when selecting a bank account:
Paying bills or building your nest egg?
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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 simply feel 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 hacked your bank account or stole 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 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 Citi 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 that 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?
Locate this information on your most recent bank statement or by logging into your online banking account. Or call your bank directly.
Which bank 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?
Visit your nearest bank branch or use your financial institution’s phone banking service to make a transfer. 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.
Also, you can transfer money between accounts through your cell phone.
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How do I get cash without my direct express card because I’m waiting on my replacement card in the mail.
Hi Amanda,
Thanks for getting in touch! To withdraw cash from your Direct Express card while you wait on your replacement card, you may visit any bank or credit union that displays the MasterCard® acceptance mark and get cash from a teller. Hope this helps and let me know if you have questions, I’m here to help!
Best,
Nikki
I would like to set up an account for my civic organization that requires two authorizations (digital preferred) for any withdrawal of $5000 or more. Can you please help me find a bank that will provide this service?
Hi Jeff,
Thanks for reaching out.
So far, we do not have an available comparison page for different bank accounts, but most major banks would allow you to open a bank account for your civic organization with two authorized signatories. I would suggest that you contact any of the banks near your office to confirm your application.
Meantime, you may like to read our guide on choosing a bank account that will work according to your needs.
Cheers,
May