5 Different Types of Bank Accounts

Basic Checking Accounts

*aka "no frills" account *offers a limited set of services at a low cost *able to perform basic functions such as, check writing *usually do not pay interest and may restrict or impose additional fees for excessive activity such as writing more than a certain number of checks per month

Interest-Bearing Checking Accounts

*contrasted to "no frills" *offer a limited set of services at a higher cost *able to write unlimited number of checks *known as a NOW (negotiable order of withdrawal) *charges a monthly service fee if the balance falls below minimum

Money Market Deposit Accounts (MMDAs)

*invest your balance in short-term debt such as commercial papers *rates they offer tend to be slightly higher than on interest bearing accounts *requires higher minimum balance to start earning interest *provides only limited check writing privileges

Savings Accounts

*provides a way for someone to save money *able to make deposits and withdrawals *usually can't write checks *pays interest higher than a checking account but lower than money market account *charges fee if balance falls below minimum