Everyday Finances
Most of us have following types of bank accounts:
Things to consider:
Other choices apart from regular accounts -
- Checking
- Used for everyday expenses in our daily life
- Most checking accounts offer check writing facility with initial set of free checks
- NO interest
- Savings
- Typically used as a regular savings
- Emergency funds
- No interest or very low interest rate
- Money Market
- Similar to Savings but typically has restriction on withdrawals
- In most cases also has a minimum balance restriction if not maintained monthly fees apply
- Occasionally may offer promotional rates
Things to consider:
- Try to get a ZERO balance Checking/Savings accounts
- No maintenance fees
- If you are comfortable with "Online" banking accounts then by all means go for it as they pay higher interest rate and provide ACH transfers (automated clearing house) along with free bill pay
- Make sure you do your homework to find out bank rating/reviews
Other choices apart from regular accounts -
- Online Checking/ Savings/ Money Market
- High interest rates
- you can do all transaction using online banking, save money on checks
- No hassle of any paper work even to open many accounts
- Free bill payment however no free personal checks
- No maintenance fees
- Certificate of Deposit (also known as "CD")
- Available in 3/ 6/ 7/ 9/ 12 months and longer period
- Provides Fixed Interest rate for the entire term
- You cannot remove money before the term ends (locks you money for a particular period) although you have an option to break the CD by paying penalty (read terms and conditions - ask questions)
- Different types of CDs are available by different financial institutions, e.g. No penalty CD, Callable CD, etc.
- Use CD laddering to avoid locking your money in 1 CD, instead spread it over 4-5 CDs of same term or various terms providing you flexibility