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Do You Need Another Bank Account?

Having money in the bank puts a smile on our lips and a spring in our steps. But is having two accounts going to make you any happier? Having the right number and type of bank account is vital to avoid paying excess fees and allowing you to manage your money effectively. Let us see the features of these accounts lest they prove to be ostentatious extensions that eat up our money.

Savings Account

With its modest interest rate, the quintessential savings bank account is the starting place for most bank users, though it would hardly be the predominant choice of someone who wants to make the most out of his or her capital. And yet, it serves its purpose. It secures the money in the bank and is readily accessible to the user at any time they want.

You have certain limitations on the mode of use by way of the number of withdrawal transactions and the amount of interest. On the flip side, you find the ease of use makes up for everything else. You can avoid monthly fees if you maintain a minimum stipulated balance. Financial institutions have a mandatory savings account because they use this fund to lend money to users. This savings account gives you a separate source of money apart from any other you use for your daily needs.

While you may use it for your kids, it doesn’t come with a debit card facility to make purchases. To improve your savings account balance, make regular deposits from another bank account or you can make a big deposit to take care of this.

Checking Account

This basic bank account allows you to do check deposits, pay bills, and make withdrawals. Checking accounts envisages the use of online and paper checks, though the latter is fast losing popularity as a financial instrument.

Debit cards have taken over the role of the paper check so that you are now able to pay bills online using your checking account. Thus, it remains trusted by users because it is manageable, making it easy to use. But you must remain wary of fees for various services that may amount to a huge number by the end of every month. Do you want this account? You should inquire about it if you want the online payment feature.

To avoid paying undue fees and detect fraud in time, balance the checking account each month. Also, deposit your wages directly into checking. This will help you to get your money fast. Use a credit card instead of a debit card for your daily expenses.

Certificate of Deposit Account

This kind of account will help you earn more through your deposit compared to the options listed above. The catch is that you must keep the money in the CD account for a stipulated period — such as 12 months or 18 months. If you have money that you don’t want in the immediate present, the CD Account is a good option to earn interest on your capital.

Earning money by keeping it locked up is good if you really want to save properly. One is that it remains safe out of the way of daily transactions so that it will be there in full when you need it. Secondly, it earns a good rate of interest. Since this brings in more money than the other two kinds of bank accounts, you will do well to use this. The shortcoming is that you must not withdraw early or you will have to pay a penalty. Also, you can set up a CD ladder that allows you access to a part of your money on a regular basis. A few banks allow you the flexibility of withdrawing money early, but then again, some refuse to consider early withdrawals at all. So, check this aspect before you decide to open a CD account.

One size doesn’t fit everyone. People who live from paycheck to paycheck may need a tangible method of accessing and using money. A savings account alone might not prove enough since the method of withdrawal and transactions remains limited. A second checking account becomes necessary. A separate savings account will help you save money regularly. For those who have extra money, a CD account is useful. The financial decisions you make will depend on the kind of bank account you have, so choose one with care!

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