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Different Types of Bank Accounts: Checking Account, Savings Account and CDs for Financial Goals

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Today, many people may be confused about bank accounts and how they play a role in achieving financial goals. There is a plethora of choices about what types of bank accounts to use to pay creditors, save for future purposes, or long-term savings goals. Three common types of bank accounts are checking, savings and certificate of deposits.
Checking Account
Bank checking accounts are accounts in which money is deposited and checks are written to pay bills, purchase products or services, send money, transfer money into other accounts or institutions. Checks are used like cash to pay creditors.
Banks may impose fees on checking accounts, such as fees for blank checks, monthly fees for minimum balances or if balance falls below a set amount. Some banks charge a fee for every transaction made. Some banks will provide overdraft protection if account does not contain funds for payment to creditors; however, they usually charge a hefty fee for this service.
Some checking accounts pay interest while others do not. Most interest bearing checking accounts require a set minimum balance that must be maintained. For everyday needs, a checking account can be a valuable tool for tracking debits and credits; therefore, a checking account can be a great financial organizational tool.
Savings Account
Bank savings accounts are accounts used to store money that is not needed immediately. Most banks require a minimum deposit for a savings account. The money deposited will earn interest; however, the number of withdrawals or transfers that can be made are limited.



Most banks offer different types of saving accounts. For example, a passbook savings account, which a record book is used to keep track of transactions and is presented to bank personnel each time a deposit or withdrawal is made. Savings accounts can be beneficial for short-term financial goals.
Certificate of Deposit
Certificate of deposit, or CDs as they are commonly referred, offer a guaranteed rate of interest for money deposited for a specific amount of time, known as a term. Typically, terms run from three months to five years. The longer the term, the higher the interest rate. Money should remain in the account until the end of the term when the CD reaches maturity.
If the initial deposit must be withdrawn before the maturity date, many banks will impose hefty penalties. Before a CD reaches maturity, banks will notify the owner and the CD can be renewed or the appropriate action taken. CDs are good tools for achieving long-term financial goals.
What type of bank account to use depends on what financial goals are a person is seeking. There are bank accounts for paying creditors, short-term or long-term financial goals. Knowing what type of bank account to sue is helpful to achieving those financial goals.

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