BanksAct

Commercial banks have deposits from individuals and then lend the money to borrowers. A variety of accounts are offered by commercial banks. These accounts are created to meet specific needs, such as transferring money easily or earning interest. We want to tell you more about every type of deposit account.

Savings Accounts

If you want to store money in the bank and get a small amount of interest – savings account is the best for you. Though you won’t be able to transfer your money frequently, you can access your money when needed without penalty. If you think that soon you will need money – saving account will be the most convenient account for you. Savings accounts are protected by the Federal Deposit Insurance Corp.

Checking Accounts

This account is the most liquid one, as money can be transferred out of  it. Compare the monthly fees, minimum balance requirements and interest rates. Many checking accounts offer you debit cards linked to them, you to use them instead of manually writing out checks. Checking accounts are protected by FDIC insurance.

Certificates of Deposit

Certificates of deposit bring higher yield, than regular savings accounts. In exchange your funds are unavailable for months or years. For longer maturities banks offer higher rates. Bank can invest your money in long-term investments with higher rates of return.

Withdrawing  your money before the matures you will have to pay a severe penalty.

Money Market Deposit Accounts

Money market deposit accounts usually pay higher interest rates than savings accounts because they have higher minimum account balance requirements. Depending on how much money you keep in the account interest rates can vary.

If your balance is between $1,000 and $10,000 an account may yield 1 percent interest,

if your average account balance is between $10,000 – 2 percent

if your average account balance is over $25,000 – 3 percent

For mid-range investments, money market accounts are the best investment choice. They pay more in interest than checking or savings accounts.

Money Market Mutual Fund Accounts

Money market mutual fund accounts are invested in short-term investments that will mature in no more than 13 months. They don’t lose money, because they make investments very secure. If the bank should fail you may lose your investment, because these accounts are not covered by FDIC.