March 22, 2023

What Types Of Bank Accounts Should You Open?

There are a lot of bank accounts that exist in the world. Each one has very specific features and differences, which cater to different wants and needs of the people. Whether you’re an individual or a business company, bank accounts are a must in the modern era. It is essentially how we transact and deal with money most of the time, especially in larger quantities and scales. Truly remember the last time where a week has gone by where you’ve only been using cash. With the convenience of tapping your card or phone, or entering your credit card details, paying for things has never been easier because of bank accounts. Their evolution and integration with society have made it essential to basically have a bank account for each and every one of us. 

Going back to the question, which type of bank account should you open and own? The simple answer would, of course, be: it depends. Do you do a lot of certificates of deposits (CDs)? If so, then it’s worth it to look at CIT Bank CD rates for their special discounts. Do you dabble in investing? Then an investment-focused bank account would be your best bet. However, the ones that we will list below will probably benefit the most people, and opening them will also probably make your life more convenient and better as a whole. 

Cash Vs. Bank Account

If you could carry around your cash anywhere, why does it matter to even have a bank account in the first place? There are multiple reasons. For one, a bank account is more secure. You have your money insured by the FDIC for most cases, and your money inside that account is less likely to be stolen. Carrying around big wads of cash only invites danger and thieves. 

Since cash can be spent without a trace (if done in small amounts), then they are more likely to be attractive to thieves and robbers. Spending money using cold hard cash also doesn’t give you the benefits of using credit found within a bank account. If you pay for things using your bank account and accrue a good credit score, you could actually find better deals and discounts when it comes to loans. You could also loan larger amounts of money if you have a good credit score. These perks and benefits are simply not available to the people who simply spend everything using cash.

Now that’s out of the way, what are the bank accounts that we consider essential? Below are two of them that we think everyone should open as soon as possible. They cover both fronts of the spending spectrum, both short-term and long-term. Depending on your needs and wants, you could prioritize one over the other. 

Savings Account

A savings account is the best type of bank account for long-term savings. It’s basically a long-term, secure piggy bank that is insured. You essentially put money in a bank and let it accrue interest in the long term. The interest comes from other members that take up a loan in the same bank and pay them back with interest. This type of bank account is very important for everyone as it could be a way for you to secure your future financially. 

If you have long-term goals like saving up for a house or having a lot of money for retirement, then a savings bank account would be your best case. Keep in mind, however, that in exchange for security, savings bank accounts also have very low-interest rates. This is because the goal is to save and not lose money on inflation rather than to profit altogether. 

Checking Account

Another type of bank account that could be considered essential is a checking account. A checking account is essentially a bank account that gives you access to money more easily than a savings account and is used more for spending your day-to-day wants and needs. You could deposit a part of your monthly income, withdraw money, write checks, and so many more. These three main activities are probably what you’re using the most when living daily. For example, paying electricity bills and buying groceries are the areas where a checking account would be very beneficial.

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