One of the easiest ways to become a bank’s client is to open a bank account. For people without a high credit score or those who aren’t good at finance, this seems to be the most convenient (and, sometimes, less expendable) option. There is a solid diversity of bank account types, but the most well-known ones include checking bank accounts and savings bank accounts.
Checking bank accounts are actually the accounts where you can deposit your funds and spend them with a prepaid debit or a credit card. Most of the checking accounts are “simple,” which means they do not yield any interest rate on those funds in the accounts. But there are also interest rate checking bank accounts – they offer (quite meager, however) interest rate on any funds.
But if you wish to get a higher return on your funds, you might deposit them in a savings bank account. While you will be able to use them anyway, you will get a far higher yield than, otherwise, you would get with a checking bank account. In simple words, savings accounts allow you to enjoy the flexibility of your funds while enjoying a better interest rate.
But the diversity of bank accounts is not limited just to these two types. There are also quite a few of other bank account types, including certificates of deposit (CDs), money market accounts, investment retirement accounts (IRAs), and brokerage accounts. And while brokerage accounts and money market accounts are used for accessing the money market or stock market, the remaining two types are used for investing your funds.
Certificates of deposit, known also as CDs, are similar in many ways to savings bank accounts. They offer you to deposit your money for a certain interest rate for a certain period of time. CDs tend to be far more appealing than savings account due to the higher interest rate they offer. However, there are minimum required amounts for certificates of deposit, which typically start from $1,000. But the most important thing is that you cannot get your money back before the maturity date.
Investment retirement accounts are also known as IRAs and appear to be a type of bank accounts that allow the people to save for their retirement. As one may understand, money from these accounts can be invested only in the safest assets. However, the aim of such accounts is to invest in the ventures than offer higher yields than CDs or savings accounts.
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