Checking, Savings, Money Market, and CD Accounts - The Benefits of Each Financial Option

Checking, Savings, Money Market, and CD Accounts - The Benefits of Each Financial Option

Whether for the safety and security of your hard-earned dollars or for the convenience of making deposits and paying your bills, there are various financial options when it comes to checking account and savings account types. You will also find various specialized money market accounts and certificates of deposit (CDs) for saving and growing your money along the way. Depending on your situation and needs, each of these standard financial options has both advantages and disadvantages. Each should be considered carefully when deciding just which one, or a combination of two or more, are designed to serve you best.

Checking Accounts

A checking account is a type of bank account against which checks can be drawn by the account depositor, allowing the account holder to write checks to withdraw money or make payments to third parties using a check. Most checking accounts also provide for online bill pay when certain conditions are met.

There are many benefits to having a personal checking account.

  • The safety and convenience of a checking account allow you to spend your money without carrying around cash.
  • Canceled checks also provide proof that a payment was made.
  • Being able to write checks gives you the ability to pay bills or send funds through the mail.
  • Properly using and maintaining a checking account can often be an asset when attempting to establish or obtain credit.
  • And the account also provides an ongoing record of checking activities to help you budget your income and spending.

Personal checking accounts can be either non-interest-bearing accounts or interest-bearing accounts, and they are usually available in a variety of options to best suit the individual customer’s situation and needs.

Regular checking accounts, special accounts designed for seniors, and even environmentally friendly accounts for those wanting to go green are usually available. Some accounts have minimum balance requirements and fees, offer both e-statements and paper statement options, and have additional benefits such as overdraft privilege.

Savings Accounts

A savings account is a type of interest-bearing bank account that provides a place for you to keep some of your money separate from the funds you use for monthly bills and everyday expenses. While most savings accounts provide an interest rate that may be lower than some other available savings options, they often pay a higher rate than interest-bearing checking accounts and will generally give you easier and quicker access to your savings whenever needed for unexpected emergencies such as car repairs or medical expenses. Savings accounts can also be a good place to save for a planned extravagance such as a new car, new furniture, or an expensive vacation.

A typical savings account will have a limit on the number of total transactions and account withdrawals and may have minimum balance requirements to qualify for certain interest rates or to avoid fees. Unlike checking accounts, most savings accounts don’t offer the use of check writing or debit cards for access to funds.

Like checking accounts, your funds held in savings accounts are insured by the Federal Deposit Insurance Corporation, but there are some disadvantages. As previously mentioned, the rate of return you will earn on your savings won’t be as high as you might achieve with some other savings options, and there are usually some withdrawal restrictions along with fees and minimum balance requirements.

Money Market Accounts

A money market account is another type of interest-bearing savings account that can function like both a savings account and a checking account by paying interest on your deposits while giving you the ability to write checks along with easy access to your money.

Like a regular savings account, a money market account will pay a higher interest rate than will an interest-bearing checking account, but unlike most regular savings accounts, many money market accounts will also include check-writing privileges along with the added convenience of debit card and even ATM availability. Having some form of a savings account can be an important component of your financial health, and a money market account will often help grow your savings faster than a standard savings account. And like checking and savings accounts, a money market account is a safe place for your money since it is also FDIC insured.

On the downside, most money market accounts also have restrictions that make them somewhat less flexible than either a regular checking account or a regular savings account. Higher minimum balance requirements, higher fees when certain balance levels are not maintained, and a limit on the number of transactions you are allowed make are just some things to consider when weighing the cost of the expected higher interest rate of return.

Certificate of Deposit

A certificate of deposit (CD) is another bank savings option to consider. Like checking accounts, savings accounts, and money market accounts, your money in a CD is federally insured. But a CD is different in that it has a specified fixed date of withdrawal or maturity date along as well as a fixed interest rate and it generally has no monthly fees.

Depending on the CDs term length, the interest rates paid on CDs are usually higher than those paid on savings accounts and money market accounts. But before the maturity date, you won’t be able to access your funds without paying a penalty which can amount to a loss of several months’ worth of accrued interest. The benefits of a higher interest rate can be substantial, especially on the longer-term CDs, but before committing your money to a CD, make sure that you are unlikely to need the funds before the CDs maturity date.

Regardless of which account type or even several types of accounts you choose to use, a hometown institution like Citizens State Bank with the convenience of bank branches in Tyler as well as in many other East Texas communities will offer the variety of services you may be seeking. From online banking and mobile banking to easy online bill pay, ATM access, and debit card availability, along with low banking fees, low rates on loans, and best rates on savings, you will find much more than just the basic checking, savings, money market, and CD accounts.