5.1 Types of Bank Accounts and Their Features

Banking is all about keeping your money safe and making it work for you. Different accounts serve different purposes, from everyday spending to long-term savings. Knowing the types and features helps you choose what's best for your needs.

From checking to savings, CDs to money market accounts, each offers unique benefits. Understanding interest rates, fees, and access options lets you maximize your money's potential while keeping it secure and easily accessible when you need it.

Types of Bank Accounts

Common Personal Banking Accounts

Top images from around the web for Common Personal Banking Accounts

• 

  The Commercial Banking System | Macroeconomics with Prof. Dolar View original

  Is this image relevant?

• 

  Account Categories – Business Finance View original

  Is this image relevant?

• 

  The Commercial Banking System | Macroeconomics View original

  Is this image relevant?

• 

  The Commercial Banking System | Macroeconomics with Prof. Dolar View original

  Is this image relevant?

• 

  Account Categories – Business Finance View original

  Is this image relevant?

1 of 3

Top images from around the web for Common Personal Banking Accounts

• 

  The Commercial Banking System | Macroeconomics with Prof. Dolar View original

  Is this image relevant?

• 

  Account Categories – Business Finance View original

  Is this image relevant?

• 

  The Commercial Banking System | Macroeconomics View original

  Is this image relevant?

• 

  The Commercial Banking System | Macroeconomics with Prof. Dolar View original

  Is this image relevant?

• 

  Account Categories – Business Finance View original

  Is this image relevant?

1 of 3

• Checking accounts provide easy access to funds for daily transactions through checks, debit cards, and electronic transfers
• Savings accounts store money while earning interest, designed for accumulating funds over time
• Money market accounts blend features of checking and savings accounts, often offering higher interest rates with some check-writing privileges
• Certificates of deposit (CDs) lock funds for a set period in exchange for higher interest rates, with penalties for early withdrawal

Specialized Account Types

• Business checking accounts cater to company financial needs, offering features like multiple signatories and higher transaction limits
• Student checking accounts typically have lower fees and minimum balance requirements, tailored for young adults
• Joint accounts allow multiple individuals to share access and responsibility for the same account
• Trust accounts manage assets for beneficiaries, often used in estate planning

Account Features and Benefits

Interest and Insurance

• Interest rates vary by account type and financial institution, with savings accounts generally offering higher rates than checking accounts
• Annual Percentage Yield (APY) represents the total interest earned over a year, accounting for compounding
• FDIC insurance protects depositors up to $250,000 per account ownership category, per insured bank
• Credit unions offer similar protection through the National Credit Union Administration (NCUA)

Accessibility and Protection

• ATM access allows for cash withdrawals, deposits, and account inquiries at convenient locations
• Online and mobile banking platforms provide 24/7 account management, including transfers and bill payments
• Overdraft protection prevents transactions from being declined when account balance is insufficient
  • Can link to a savings account or credit line
  • May incur fees for each overdraft transfer

Account Requirements and Fees

Balance and Activity Requirements

• Minimum balance requirements vary by account type and bank
  • Can range from $0 to several thousand dollars
  • Failing to maintain minimum balance may result in fees or reduced benefits
• Some accounts require a minimum number of transactions or direct deposits to waive monthly fees
• Account inactivity may lead to dormancy fees or account closure after extended periods

Common Banking Fees

• Monthly maintenance fees charged for account upkeep, often waivable with minimum balance or direct deposit
• ATM fees for using out-of-network machines, both from your bank and the ATM owner
• Overdraft fees charged when account is overdrawn, can be substantial (often $30-$35 per occurrence)
• Wire transfer fees for sending or receiving funds domestically or internationally
• Foreign transaction fees for using debit cards abroad, typically a percentage of the transaction amount