Finding the Right Bank Account for Your Needs
The types of bank accounts offered by numerous banks, savings and loans associations and credit unions are nearly limitless. How do you find the one that will meet your needs? The first step is to explore your financial status and determine exactly what kind of services you need. Do you want to seriously save money or do you just want a venue for easy and efficient bill paying? Will this account merely be a cash flow repository or do you want to leave the money untouched and earn serious interest? Or do you crave the best of both worlds?
In the first Instance, where the goal is to have a way to pay bills efficiently, the basic checking account is the way to go. The account will function to allow bill payment, via Internet or checks sent through the mail and will probably provide you with an ATM card so that you can access your money. Direct deposit of your paycheck or annuity may reduce the fees associated with this type of account but there will be a charge for each check order, unless there is a specific promotion being offered at the time that you open the account. These accounts are basic, do not earn interest but do provide a secure way to make payments.
When your goal is to save money the obvious choice is a savings account. The interest paid is minimal and may not even be equal to the inflation rate or cost of living increases. However interest is paid on the balance and it is a no risk situation, when the financial institution is a federally insured bank or savings and loan institution. There may or may not be yearly fees associated with this type of account and the current rate of interest earned will be 1 to 5.75 % of your balance, depending on the financial institution.
However, the advantage to a simple savings account is that you can access your money without penalty if need be so, overall, this type of account may be a preferable option to a CD, which requires a fixed minimum deposit for a specified time period, and exacts interest negating penalties for early withdrawal.
Now for those of you who want the best of worlds, accessibility and interest, a money market bank account may be just the thing. Money markets do require a minimum balance to open, which must be maintained. However, they also pay interest comparable to a savings account and they allow unlimited ATM accessibility and limited check privileges. There is a cost for the checks and no interest will accrue if the balance falls below the minimum but if you have 1000 dollars for a minimum deposit and write few checks, this is the way to go.
by Sally.Anderson 19 years ago