5 types of bank accounts: How to find the right one for you

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Most of us have a checking account, but having just one bank account isn’t always enough. In fact, having multiple accounts can make it easier to track and manage your money.

Each of your bank accounts should serve a different purpose. Here are the five most common types of bank accounts to consider.

1. Checking account

If you have a bank account, chances are, you have a checking account. These accounts are designed for everyday transactions.

Checking accounts offer easy access to your money through ATM withdrawals, checks, debit cards, and bank transfers. You can often access your money without paying any fees, though there might be withdrawal fees at out-of-network ATMs.

This accessibility makes checking accounts ideal for daily transactions, such as paying bills or withdrawing cash.

Checking accounts typically come with online or mobile banking features. This makes it easy to check your account balance, pay bills, and transfer money all in one place.

Many employers also offer direct paycheck deposits into a checking account. That way, you don’t need to deal with cashing paper checks, which saves time and is more convenient.

Some examples of the best checking accounts are:

• SoFi Checking and Savings: Earn interest on your checking account funds with qualifying direct deposit. You’ll also get access to a high-yield savings account. 
• Discover Cashback Debit Account: Earn 1% cash back on up to $3,000 in monthly debit card purchases.
• Capital One 360® Checking Account: This account comes with no fees and makes it easy to access cash at over 70,000 in-network ATMs. Plus, unlike SoFi and Discover, you can get in-person support at a physical branch.

2. Traditional savings accounts

There are many benefits to opening a separate savings account. Unlike most checking accounts, savings accounts earn interest. The average savings account interest rate is 0.58%, which is still better than what you'd get with a checking account — many of which don’t offer any interest.

A savings account is a good place to save for emergencies and future goals. Having separate accounts for each savings goal can also reduce the temptation to spend money you're setting aside.

You can often set up automatic transfers to your savings account, helping you build your savings without thinking about it.

Your current bank likely offers a savings account, but other (and maybe better) options exist at other banks. Remember that many large banks don’t offer much interest on their savings accounts — sometimes as low as 0.01%.

Examples of traditional savings accounts include:

• Bank of America Advantage Savings: Traditional savings account with the ability to earn cash back on daily purchases. There are ways to waive monthly maintenance fees, like maintaining a minimum balance or linking to a Bank of America checking account.
• Chase Premier Savings℠: There’s no minimum required to open this account, and the monthly fee can be waived by linking a Chase checking account. You’ll also get access to more than 15,000 ATMs and 4,700 branches.
• Wells Fargo’s Way2Save ® Savings: Traditional savings account that offers 0.15% annual percentage yield (APY), higher than most big banks. You can waive the monthly service fee by setting up automatic transfers or maintaining a minimum balance.

3. High-yield savings accounts

As their name suggests, high-yield savings accounts offer higher interest than traditional accounts. The best high-yield accounts offer rates of up to 5% or higher, helping you grow your savings much faster.

For example, if you put $5,000 in a high-yield savings account earning 5%, you’d earn $250 in interest alone in the first year.

When choosing a high-yield savings account, look for one with low or no monthly fees. Keep in mind you may need a minimum initial deposit to open an account.

You can easily access the money in your high-yield savings account through bank transfer. Remember that some high-yield accounts may limit the number of withdrawals you can make each month.

High-yield savings accounts are often available at online banks, which, unlike traditional banks, don’t have brick-and-mortar locations. They almost always offer FDIC insurance, so your money is as safe as it would be at a big bank.

Some of the best high-yield savings accounts include:

• EverBank: Currently offers 5.15% APY with no minimum balance requirements or monthly fees. 
• Laurel Road: Currently offers 5% APY with no minimum balance requirements or monthly fees.
• Synchrony Bank: Currently offers 4.75% APY with no minimum balance requirements or monthly fees.

4. Certificate of deposit (CD)

A CD is a financial product that pays higher interest in exchange for locking your money in the account for a set time. CD rates are often much higher than traditional savings accounts and can be even higher than high-yield accounts. You may face penalties and fees if you withdraw your money before the term ends.

CD terms can be anywhere from a few months to several years, making them a good choice for medium- to long-term savings. CDs with longer terms generally have higher rates.

When choosing a CD, make sure you review the term length, interest rate, and penalties. Most CDs have minimum initial deposit requirements, so keep this in mind.

Some of the best CDs include:

• EverBank 9-month CD: Currently pays 5.50% APY with a minimum $1,000 deposit.
• Forbright Bank 9-month CD: Currently pays 5.75% APY with a minimum $1,000 deposit.
• Jovia 13-month CD: Currently pays 5.15% APY with a minimum $100 deposit.

5. Money market account

Money market accounts are all about flexibility. These accounts often have higher interest rates than traditional savings accounts but also come with some checking account features.

For instance, some money market accounts have check-writing privileges and debit card access. This gives you more flexibility and accessibility. Remember, there may still be limits on the number of withdrawals you can make in a month.

Some money market accounts may have tiered interest rates or require a minimum balance to earn the highest APY. Like other bank accounts, money market accounts are usually FDIC-insured.

Money market accounts offer a middle ground between liquidity and higher interest rates. Some of the best money market accounts include:

• VirtualBank money market account: Currently offers 5.00% APY with a $100 minimum opening deposit and no minimum balance to earn APY.
• Vio Bank money market account: Currently offers 5.30% APY with a $100 minimum opening deposit and no minimum balance to earn APY.
• UFB Direct money market account: Currently offers 5.25% APY with a $1 minimum deposit and no minimum balance to earn APY. You must keep at least $5,000 to avoid the $10 monthly service fee.

The bottom line

Many of these accounts — including high-yield savings, CDs, and money market accounts — offer the chance to earn higher interest. That makes them a great option to help you reach your savings goals.

While having multiple bank accounts can be beneficial, keeping track of each account is essential to avoid unnecessary fees.

Regularly review your accounts and ensure you meet the minimum balance requirements to maximize the benefits. That way, you can find the right account for you.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.