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The Basics of Bank AccountsBasics of bank accounts are going to analyze some of the difference in bank accounts, why we need them, and what a bank account really is. A bank account is simply any account you open with a certified bank in which you are adding and subtracting money to. There are two types of accounts called current and savings. The current accounts tend to offer more amenities as an everyday account where you would withdraw and add to the account on a regular basis, where as a savings account is generally where you would add money more than withdraw it. Why do we need bank accounts? There are many reasons including the ease of paying our bills, paying for groceries, and having a secure place to keep our money. A bank is going to insure your account. This means if the bank experiences trouble your money will still be there. Even in the event of identity theft your money is secure. So one reason for needing a bank account is to make your funds more secure than they would be hidden under a mattress where it lacks insurance. Second many bills require that you pay with a check, debit card, or money order. There are very few places that you can walk in and pay cash. It is not that cash is unwelcome, but online bill paying has made a store front for many places obsolete. Grocery stores have changed how they will accept payment as well. Many refuse checks, but take debit cards. Another avenue to consider is the pay and go. Many gas stations and fast food places are offering a quick scan of the card so that you might be on your way. Without a debit card to pay for these transactions you would be wasting a little time. Lastly bank accounts offer interest to be earned. In this last part of the discussion we will compare a savings and current account. The savings accounts have a better interest rate that the bank offers you. You also have a place to keep a little money in for emergencies or other reasons. You can also continue to add to the account and withdraw it if need be. A savings account generally offers you more time to accrue interest. A current account is going to offer you more services such as online bill pay, checks, debit cards, and easier access to the money than a savings account. Current accounts also accrue interest, but at a slower pace because the money is coming in and out of the account more frequently. The interest rate is going to be less than your savings account. When you decide you need a bank account it is best to have both types of accounts. The savings account will increase over time as you place more money in it and due to the interest and the current account is extremely functional for your daily needs. In basics of bank accounts you now know the definition of the accounts and why you need them. Financial News March 2008 |
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