What type of account should you open? The answer depends on how you plan to use the account. If you want to build up your savings and you think that you will not need your money soon, a certificate of deposit may be right for you.
If you need to reach your money, however, a savings or checking account may be a better choice. You will probably find that a checking account is best for you if you plan to write several checks each month (for example, to pay bills). But if you usually write only two or three checks each month, then an MMDA might be a better deal. MMDAs usually pay a higher rate of interest than do checking accounts, but minimum balance requirements are often higher as well.
Remember, account features and fees vary from one institution to the next. If you have questions, you should ask a representative of the institution about any account features and fees BEFORE you open an account.
Type of account Will I earn interest? May I write checks? Are there withdrawal limitations? Are fees likely?
Regular checking No Yes No Yes
Interest checking (NOW) Yes Yes No Yes
Money Market Deposit Account (MMDA) Yes, usually higher than NOW or savings Yes, only 3 per month Yes, 6 transfers per month Yes
Savings Yes No Same as MMDA Yes
Certificate of Deposit (CD) Yes, usually higher than MMDA No Yes, usually no withdrawals of principals until the date of maturity Yes, if you withdraw principal funds before the date of maturity
RSS
What type of account should you open? The answer depends on how you plan to use the account. If you want to build up your savings and you think that you will not need your money soon, a certificate of deposit may be right for you.
If you need to reach your money, however, a savings or checking account may be a better choice. You will probably find that a checking account is best for you if you plan to write several checks each month (for example, to pay bills). But if you usually write only two or three checks each month, then an MMDA might be a better deal. MMDAs usually pay a higher rate of interest than do checking accounts, but minimum balance requirements are often higher as well.
Remember, account features and fees vary from one institution to the next. If you have questions, you should ask a representative of the institution about any account features and fees BEFORE you open an account.
Type of account Will I earn interest? May I write checks? Are there withdrawal limitations? Are fees likely? Regular checking No Yes No Yes Interest checking (NOW) Yes Yes No Yes Money Market Deposit Account (MMDA) Yes, usually higher than NOW or savings Yes, only 3 per month Yes, 6 transfers per month Yes Savings Yes No Same as MMDA Yes Certificate of Deposit (CD) Yes, usually higher than MMDA No Yes, usually no withdrawals of principals until the date of maturity Yes, if you withdraw principal funds before the date of maturity