Opening a new bank account is a major step in your life, and as such it should not be taken lightly. Depending upon the use that you have intended for the account, certain options might be very beneficial to you while others might not be beneficial at all.
By taking a little time to consider exactly how you plan on using the new account, you might find that the account that you had in mind isn't the best option available to you… or you might confirm that the new account is exactly what you need.
Below is some additional information on some of the most common types of bank accounts, so that you can take the time to compare some of the advantages and disadvantages of each and decide which type of account is best to meet your needs.
One of the more common types of accounts, chequeing accounts allow you to write cheques or use a cheque card in place of carrying cash. The amount of the purchase is deducted from the balance of your account, and you are usually allowed quite a bit of access to the account over the course of the month if not unlimited access.
The main drawback of chequeing accounts is the fact that unless you keep records of all of your transactions it can be quite easy to become overdrawn which leads to fines and other fees.
Quite possibly the most common account type, savings accounts are designed to assist you in saving money for the future. These accounts usually offer decent interest rates and may have several options available concerning accessibility to the account… the number of withdrawals allowed each month is severely limited, however.
A money market account, sometimes referred to as an investment account, uses the value of stock market investments to determine the interest rate on the account. These accounts are most often used to have a balance from which to make investments in the market, though some banks also use them as a separate account option as well.
The number of withdrawals allowed may vary from bank to bank, especially depending upon the intended use of the account.
Certificate of Deposit
When you want to find the best interest rates and terms on savings, you might want to look at getting a certificate of deposit. These accounts are designed for savings over a period of time… the term of the certificate is set when it is opened, and it gains interest until that period has expired.
Fines and penalties often apply for early withdrawal, though most certificates of deposit have a brief period each year that allows for withdrawal without the penalties.
Credit cards and lines of credit are also common types of accounts, but unlike the other account types listed here they are actually forms of loans. When you open a credit line or receive a credit card, you are given a credit limit… this is the total amount that you can borrow at any given time.
Any items or services purchased using a credit card or credit line must be repaid with interest, though on-time payments are reported as a positive report toward your credit score.
The main drawback of credit cards and credit lines is that it can be easy to use them as an additional source of funds instead of merely a loan, and this sort of use can quickly build up into a significant debt.
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About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.