Exploring the Variety of 11 Types of Savings Accounts
Despite the popularity of digital payment apps and other financial technology, having a checking account, or even two, remains beneficial. Although physical checks are seldom used now (except by those who still do), checking accounts are essential for receiving pay from your job and settling bills without complications or unnecessary costs. Being unbanked can prove costly. Life becomes simpler with a checking account, even if you rarely or never write a check.
If you choose to open a checking account, you're confronted with a challenge: Which type of checking account is suitable for you? A broad range of checking accounts is available with distinctive features appealing to various demographics. The selection of banks may influence your decision based on the checking accounts they allow you to open. The right type of checking account can significantly impact your financial life. Here are the eleven primary types of checking accounts you can apply for, along with the groups who should consider each one:
Standard
A Standard Checking account is your basic, straightforward checking account. It comes bundled with a debit card, blank checks (generally requiring purchase from the bank or a third-party supplier), and regular statements. Some accounts offer interest, while others do not. If you don't plan on maintaining a balance and simply use it for bill payments while accumulating funds elsewhere, the lack of interest won't matter.
Who Should Consider It: A Standard Checking Account caters to individuals who only require paying bills and depositing a salary somewhere.
Luxury
A Luxury Checking account is an upgraded version of a Standard Account with additional features included. Typically, maintaining a substantial minimum balance is required (usually at least $15,000). In return, you'll gain access to perks that only matter to individuals with excess funds, including free checks and other services (such as money orders or wire transfers), no fees on ATM transactions, and a complimentary safety deposit box. These accounts almost always provide interest (usually at higher rates than Standard accounts).
Who Should Consider It: People who will actually utilize their banking services regularly and have spare cash to leave in an account without worry. If you often use ATMs or write numerous checks, the benefits and higher interest will benefit you.
Checkless
As expected, a Checkless Checking account does not issue paper checks; you can only access your funds through debit card or online transactions. They can be an attractive option for avoiding overdraft fees if you frequently write checks and forget to monitor the available balance in your account.
Who Should Consider It: If you seldom write checks, frequently forget about written checks, or require an account for direct deposits, this might be an appropriate option.
Joint
A Joint Checking account allows access to multiple individuals. While traditionally associated with married couples, you don't need to be in a committed relationship to open a joint account; you can open a joint account with an elderly parent to assist with bill payment, with your children to grant them access to funds while monitoring their spending, or for any reason. The account can be a Standard, Luxury, or any other type. Keep in mind that all joint account holders have full access to both the funds and transaction records – joint accounts feature no secrets.
Who Should Consider It: Individuals who require collaboration on bill payment or consolidation of income streams with someone else, such as couples responsible for shared household bills or funds established for other reasons.
Commercial
As the name suggests, Commercial Checking accounts are designed for businesses. Many businesses maintain several accounts for specific purposes, like one for payroll and another for purchasing. If you run a small business, separating your business finances from your personal finances is prudent, and commercial accounts often provide additional features, such as the capability to issue multiple debit cards (for employees) and integration with payroll and accounting software. They generally come with higher fees (and more of them) than personal accounts.
Who Should Consider It: Anyone operating a small business.
Multiple Currency
Most US-based checking accounts transact solely in dollars. However, if you engage in business with foreign entities, receive payment in another currency, or carry accounts in other countries, a Multiple Currency Checking account could be advantageous. These accounts allow you to hold funds in various currencies within one account, easing currency conversion. You can usually set up sub-accounts for each currency to write checks in those currencies. Holding a substantial balance or being a business account holder is often a prerequisite for opening a Multiple Currency Checking account.
Who Should Consider It: Individuals who maintain high balances and often trade in multiple currencies or make numerous transactions in foreign currencies.
Student & Teen
Restricted to individuals aged 18-23, Student Checking accounts feature low minimum balances and minimal fees. They also usually include overdraft forgiveness and often provide free budgeting tools, such as smartphone applications, to help young people learn how to manage their finances. Maintaining continuous enrollment is usually required to qualify.
Who Should Consider It: College students aiming to establish their first bank accounts and learn financial management fundamentals.
A Rewards Debit Account functions similarly to a Rewards Credit Card; you receive some form of reward, often cash back, when you utilize your debit card for purchases. These accounts frequently provide high-interest rates if you maintain a substantial balance or adhere to a specific deposit schedule. Nevertheless, it's essential to consider the security concerns associated with using a debit card compared to a credit card.
Ideal Candidates: Individuals who regularly use their debit card for purchases, accepting the security risks as a trade-off.
Survival Kit
A Survival Debit Account features a minimal initial deposit (or no deposit requirement at all), minimal or no charges, and minimal requirements. These accounts are tailored for economically disadvantaged or unbanked individuals who don't qualify for a standard account. Commonly, they lack features typically found in checking accounts (such as actual paper checks), and there might be an income limit to qualify.
Ideal Candidates: Individuals struggling financially to afford a traditional checking account.
Redemption
Redemption Debit Accounts (also known as Opportunity Debit Accounts) are basic banking options provided to individuals with subpar banking histories preventing them from opening a traditional account—e.g., a history of overdrafts, bad checks, or other mishaps. Redemption accounts generally offer reduced services, and they often incur mandatory maintenance fees and minimum balances. Not all financial institutions offer them, but those that do usually provide an opportunity to upgrade the account to a regular one after maintaining it responsibly for a specified period.
Ideal Candidates: Individuals who cannot obtain a traditional account due to past banking misconducts.
Golden Years
Golden Years Debit Accounts cater to individuals aged 55 to 65+. They offer advantages such as free checks or fee waivers. These accounts are suited for senior citizens living on a fixed income following retirement. It's important to remember that this term may merely be a marketing strategy, as numerous checking accounts provide similar incentives, so it's worthwhile to examine the features offered against other accounts within your bank (or other banks) to secure the best deal.
Ideal Candidates: Retirees or anyone above the minimum age relying on a fixed income and seeking a checking account with fewer excessive fees.
After reviewing the available checking account options, you might be interested in finding the best one for managing your money effectively. The 'Standard Checking account' is a straightforward option for individuals who only need to pay bills and deposit their salary. On the other hand, if you have a significant amount of money to leave in the account without worry and frequently use ATMs or write checks, a 'Luxury Checking account' could benefit you more due to its additional features and higher interest rates.
