There are many factors to consider when choosing the type of bank account that best suits your needs:
- Does it include a debit card?
- What is the interest rate?
- Is there a fee associated with owning the account?
While each account at Saco & Biddeford Savings (SBSI) offers specific options, you first need to decide which general account type best suits your needs.
The three most commonly used account types are checking, savings, and certificates of deposits (CDs). Each serves a different purpose, and it’s up to you to assess which one works best for your financial goals. This guide offers a basic breakdown of the differences.
Checking Account
A checking account is best for those who plan on using their accounts for everyday expenses. It can come with a debit card, checks, or both, depending on what you plan on using the account for. This type of account allows for easy transfers to pay for things like groceries, rent, or any other expenses that may come up. A check register can help you keep track of expenses and cleared checks. Having a debit cards also opens the door to Apple Pay and other online payment apps, allowing consumers to pay with the click of a button.
Savings Account
A savings account best serves people who want to hold onto their money while still having access, if needed. Savings accounts earn more interest than checking accounts, which is a nice incentive to save your money. There’s no penalty for withdrawing funds, making it useful for backup cash if your checking account runs low. Since savings accounts don’t come with a debit card or checkbook, the money is a little harder to access. This can be helpful if you want to prevent yourself from buying things you don’t need or if you want to put away money for a big purchase.
Certificates of Deposit (CDs)
CDs offer even higher interest rates than a savings account, usually by a few percentage points. However, these accounts come with restrictions: you can’t withdraw funds before the CD matures without a penalty, and you can’t add more money to the account until that maturity date. CDs are helpful if you want to grow your funds with minimal risk, and if you want to put funds away to earn passive income. They also offer flexibility in term lengths, so you can choose one that works best for you.
Banking can seem overwhelming at first, but understanding the basic account types is a solid first step in taking control and deciding what works best for you. No account is one-size-fits-all, and you shouldn’t have to settle for an account that doesn’t suit your needs. Understanding which type of account you need for your money allows for growth in your savings and in the opportunities that come with financial literacy.
