Choose the Right Banking Account for Your Needs

I just saw the commercial of that bank down our street. It is offering a free bank account! Lets take it, my wife cried out. It sounds like a great idea but before you go sign up for that account and start banking with any specific bank you should know that bank accounts are not one size fits all.

When you understand the different types of bank accounts you can actually make your money work for you in the best possible way.

Different Types of Bank Accounts

The accounts offered on those commercials are usually the checking accounts. These are the most common type of bank account as they allow you to withdraw money from your account by writing checks and with a debit card.

People generally consider this as a great option as they get access to their money without having to jump through hoops or wait for a check to be cut, etc. Some checking accounts pay interest, allowing you to take advantage of average daily balances, but most typical checking accounts, also known as a demand deposit account, will not pay interest.

Money market accounts are those that offer interest on the accounts. It also allows you to write checks on it. A money market account allows for you to benefit from a higher rate of interest than your typical savings or checking account, but they do require that you have a higher minimum balance than you would have to have with other accounts.

Withdrawing funds from these accounts are not as easy as it is with a checking account. But you can still write checks on these accounts. In addition, there are usually more fees associated with this type of account, making it a good option for those that don’t necessarily need to access the cash.

One common type of account is the savings account. This is the type of account that most people use to keep the bulk of their money in. The difference is not having the benefit of being able to write checks. The benefit of interest still holds in these accounts. You may be limited as to the number of withdrawals or transfers that you are allowed to make each month and if you go over you may be charged a small fee.

Some of the other options include time deposit accounts, or certification of deposits or CDs. These accounts offer guaranteed interest rates and allow for the account holder to choose how long they would like their money to be on deposit, you can generally choose anywhere from a few days to a few years.

This account is not appropriate if you want to access the money but if you are looking to earn a high rate of interest on a specific amount of money then it might be the ideal type.

As you can see, there are many different account types for you to choose from. There are various choices of accounts that you ask your bank and then choose from them. If you still aren’t sure let them know what you will be using your account for and they will likely be able to help you make the right choice for your financial needs.

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Can I keep my bank account if I’m on a debt management plan?

People who can’t keep up with their debt repayments need to find a ‘way forward’ that they and their lenders can both accept. In many cases, this turns out to be a debt management plan, an agreement with their unsecured lenders that lets them repay the money they owe – at a rate they can afford.

There are, however, drawbacks to joining a debt management plan. Under some circumstances it can, for example, mean they have to look for a new bank account.

What will happen to my bank account?

A bank account is an important part of modern life, so thinking you might lose it is understandably worrying. However, you’re by no means certain to lose your account just because you’re on a debt management plan.

If you owe money to the bank that you have your account with, you may well have your account closed – or have the funds in it frozen.

If you don’t owe money to the bank you have your account with, you’re less likely to have your account closed, although this will be up to your bank.

Bear in mind that you might find it difficult to open a new bank account – but if you do, you should still be able to find a basic bank account. Basic bank accounts don’t have some of the features that ‘standard’ current accounts have, but they do let you do essential things like: get your wages / benefits paid directly in; take out money at UK cash machines; pay in cheques; withdraw money at Post Offices; and pay your bills by Direct Debit. [Read more →]