What are the different types of bank accounts?

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  • While there are a variety of bank account types, there are five primary types: Savings, basic checking, interest-bearing checking, money markets, and CDs
  • Savings accounts are where you put your money for that rainy day. They usually have interest rates higher than a checking account.
  • Basic checking accounts provide a minimum of services, usually they are a very low or no-interest account used to write checks, or for setting up automatic payment schedules for bills where payments are made electronically.
  • Interest-bearing checking accounts pay you an interest rate, in addition to doing everything that a standard checking account does. .
  • Money market deposit accounts (MMDAs) invest your account balance into short-term debt opportunities, treasury bills, or CDs (certificates of deposit). MMDA rates are higher than checking accounts, but require a higher minimum balance.
  • CDs are time-based deposits in which you agree to keep the entire sum in the bank for a period of time (six months, 12 months, 24 months) and the longer the time, the higher the yield or return for you (because the bank gets to use your money longer, too).
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