What Type of Bank Account is Good for Your Money?

You are introduced to the banking world when you want to start saving. You tend to opt for the safest choice to keep your hard-earned money. The Indian banking system is one of the finely operated machines. This article will provide insight into different types of bank accounts that serve different needs. Put your money wisely in your account. Wise decisions that are made once can give long-term benefits. In this way, you can get the most out of your bank. Smart decisions can reap a good Interest rate and minimum charges. You can also track your money easily.

Types of Bank Accounts and their Pros and Cons

There are mainly 5 types of bank accounts. Out of these, you can choose the best one that suits your needs. Along with the types of bank accounts, pros and cons are given. Read on to find out more about the bank account.

Types of Bank Accounts to Keep Your Money

• Savings Accounts
• Checking Accounts
• Money market Accounts 
• Certificates of deposit (CDs)
• Retirement Accounts 

Savings Accounts

Customers can save up for large purchases or emergencies with this sort of savings account. Your savings will gradually increase as time passes. This will be due to the interest you’ll earn on them.

The first type of bank account most people get is a savings account. A child can learn to save by opening an account with a parent. A savings account is a great way to save money aside from your regular checking account so that you can use it for long-term financial objectives or in case of an unexpected expense.

Pros	Cons
Useful as either a first bank account for a child or teen or as savings account for an adult who needs a safe location to keep the money they might otherwise spend frivolously.	A typical savings account’s interest rate is lower than that of money market accounts and certificates of deposits.

Checking Accounts

Everyday transactions are made with a checking account. Features such as a debit card for making purchases and withdrawals from ATMs, and the ability to write checks, are the main draws of this type of bank account. You can do things like pay bills and deposit money into the account. Online bill pays using checking accounts is a convenient option offered by most banks today.

This type of bank account is vital for controlling your monthly cash flow. It is also the greatest place to keep money for short-term use.

Pros	Cons
Anyone who needs a location to deposit a paycheck or cash or make payments, anyone who keeps a reasonably small balance, and anyone who likes the ease of using a debit card.	Checking accounts can be costly and inconvenient due to their lack of interest and the costs and limitations associated with them, such as monthly maintenance fees and minimum balance requirements.

Money Market Accounts 

An individual can have the best of both worlds with a money market account. It gives both savings and a checking facility. Useful for both short- and long-term goals, they allow for a limited number of check withdrawals per month and earn interest at a rate that is higher than that of savings or checking accounts.

You can earn more interest and have the convenience of writing checks with one of these bank accounts, which is ideal if you prefer to have a large sum in your checking account.

Pros	Cons
This account is for those who maintain sizable sums in their accounts. The customer seeking greater interest rates will benefit.	The money market requires you to maintain a higher balance as compared to other bank account types.The withdrawal limit is set to six per month.

Certificates of Deposit (CDs)

For a specified period, a certificate of deposit (CD) acts as an interest-bearing savings account. The tenure can be 3- 5 years. It offers higher interest rates than the other options. You’ll need to leave your money in the CD until its maturity date or face a penalty.

If you are saving for a specific purpose, then this is the best type of bank account.

Pros	Cons
Funds that don’t require immediate spending. Although longer-term CDs generate greater interest, shorter-term CDs are still an option.	There is a downside in that there is a penalty to withdraw money before the term is over. A loss of earnings or even the initial deposit could result from this penalty.

Savings Account for Old Age

These are, as the name implies, savings vehicles for later in life. Individual retirement accounts (IRAs) are offered by major banks. Some even offer 401(k)s and other corporate old-age plans for smaller firms. Investing your retirement savings in the stock market will give you higher returns. 401(k) plans and individual retirement accounts (IRAs) are the finest types of bank accounts for saving for retirement.

Pros	Cons
Those who wish to put money aside for the future will benefit. Having a retirement account can make saving money easier (by reducing your tax bill) and may increase your savings in the long run.	There are always strings associated with tax breaks. Learn the terms of your account by reading the agreement and talking to your banker (including rules for eligibility)

Conclusion

You must always remember that you are not limited to a single type of bank account while selecting. Customers may open any type of bank account that suits their needs. Bank/NBFCs have updated their systems so that you can log in to your accounts from anywhere at any time. Nowadays, you don’t need to visit a bank to make deposits or take out money. All thanks to facilities like mobile and net banking, you can do banking online. To get further details on banking and finance, visit the Piramal Finance website .