Checking And Savings Accounts By Bill Riley At Isnare.com Ezine Articles

Checking Accounts are operated mainly for making purchases and for paying bills. Savings accounts on the other hand, help you save money for your future. Though many banks lure you with attractive offers and freebies, you have to be careful not to choose the account merely on the basis of the benefits offered on the joining of the account.

There are different types of checking accounts. Basic, Free, Express, Lifeline, Interest-bearing, etc., are some of them. Different accounts offer different services. Therefore it is very essential that you first understand the service you require through your checking account and then opt for the right one.

For example, a Basic checking account does not offer any interest for your deposit. In other words, by choosing this account, you will avail only the services such as the payment of the bills and some debit card transactions. You may issue a certain number of checks and if you cross the limit, you will be charged an extra fee per check. Also some banks insist that you keep a minimum balance in order to supplant the monthly maintenance charges.

A Free checking account offers the service almost free of cost. There are no criteria such as the minimum balance or the restricted issues of checks. There are no service charges regardless of the number and nature of your transactions. However, you will be charged a reasonable penalty if your check gets bounced.

Interest-bearing accounts offer a very low interest, which is paid monthly. Mostly the banks require a minimum balance to operate the account; the failure of it will result in $10 service fee per month.

Express check accounts are for those who wish to avoid stepping into the banks. The service includes ATM, telephone, PC banking facilities, and unlimited check facilities. Though there is no monthly fee, the customer may often end up paying a huge service charge owing to the extra transactions made through these facilities.

Lifeline account is an economy account offered to low-income groups. The facilities include a certain number of transactions with a monthly fee ranging from zero to $6. The fees, minimum amount, and other terms of this account are normally set by the law, not by the individual banks.

Saving accounts are known for their interest rates, offered in various forms. Saving account is a ‘risk-free’ investment option for those who do not want to get into the adventurous game of mutual funds or shares.

There are different saving options- short term and long term. Certificate of Deposit will be a good option for those who intend for long-term deposits. They offer higher interest rates, but charge penalties for early withdrawals. Compound-interest saving accounts offer more advantages than simple-interest savings accounts. In compound interest savings, the interest accrued in each financial term is added to the previous principal, and the sum of the two will be counted as the principal for the next year. So every year, the amount will accrue exponentially.

Whatever the type of the account is, it is essential that you understand the basics of the services. While choosing a checking account, you may focus on the services that you require whereas for opening a savings account, you may think of the benefits, especially the interest.

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