Aside from checking accounts, they offer loans, certificates of deposits and money market accounts, not to mention traditional savings accounts. Some also allow you to set up individual retirement accounts (IRAs) and other retirement or education savings accounts. There are, of course, other types of accounts being offered at banks across the country, but these are the most common ones.
- Savings accounts - The most common type of account, and probably the first account you ever had, is a savings account. These accounts usually require either a low minimum balance or have no minimum balance requirement, and allow you to keep your money in a safe place while it earns a small amount of interest each month. In standard practice, there are no restrictions on when you can withdraw your money.
- Money market accounts - A money market account (MMA) is an interest-earning savings account with limited transaction privileges. You are usually limited to six transfers or withdrawals per month, with no more than three transactions as checks written against the account. The interest rate paid on a money market account is usually higher than that of a regular passbook savings rate. Money market accounts also have a minimum balance requirement.
- Certificates of deposit - These are accounts that allow you to put in a specific amount of money for a specific period of time. In exchange for a higher interest rate, you have to agree not to withdraw the money for the duration of the fixed time period. The interest rate changes based on the length of time you decide to leave the money in the account. You can't write checks on certificates of deposit. This arrangement not only gives the bank money they can use for other purposes, but it also lets them know exactly how long they can use that money.
- Individual retirement accounts and education savings accounts - These types of accounts require that you keep your money in the bank until you reach a certain age or your child enters college. There can be penalties with these types of accounts, however, if you use the money for something other than education, or if you withdraw the money prior to retirement age.
For much more information on banking and related topics, check out the links below.
- How Mortgages Work
- How Buying a House Works
- How Car Financing Works
- How the Fed Works
- How ATMs Work
- How 401(k) Plans Work
- How 529 Plans Work
- How Credit Cards Work
- How Credit Reports Work
- How Franchising Works
- How Recessions Work
- How Stocks and the Stock Market Work
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- I've heard of bank robbers being foiled by a "dye pack" put in their money stash. What is a "dye pack"?
- Why do some U.S. bills have a star instead of a letter at the end of the serial number?
- How do money market accounts work?
- How Stock Market Trends Work
- How Certified Financial Planners Work