9/29/2022
The proper management of money is a topic that lends itself to a heated debate about the most appropriate ways to manage our resources. One of the threads of the question lies in the need or not to have an account in a bank or credit union for this purpose.
Preferences aside, the time is right to review the types of accounts in the United States. A simple way to understand which banking product is most appropriate for your interests or needs is to know the main kinds of bank accounts.
In the USA, as in all countries that have a financial system, this does not represent much of a mystery. The dilemma for any person is simply to choose the institution with the best conditions.
Savings account with a
high yield of 4.65% APY, with no monthly service fee, that you can open from a minimum amount of $100.
Fee free online account with interest payments of
up to 3.30% APY and a $300 gift for new customers who sign up for the Rewards Checking Account.
Online interest-bearing checking account with a minimum of
0.10% APY and no fees, with free debit card, free online transfers and use of ATMs without charges.
Savings account with a profitability well above the average, with total availability of your money and with the possibility of requesting an ATM card to withdraw money.
Money market account with a higher profitability than savings accounts, with total availability of your money through checks and transfers.
In this sense, the usual reasons for opening a bank account are usually: save, earn interest, manage income better, diversify capital, invest or have different payment options for daily transactions.
North American entities are known for offering 5 basic modalities:
Savings accounts
Almost all of us, in one way or another, are familiar with these simple instruments whose purpose is to save money for emergencies, projects and other needs, obtaining a return on it (or not).
For most, especially the youngest, savings accounts represent a start in the financial world. They shouldn't be used for day-to-day operations, but it's not a written law.
These types of accounts are known to offer a monthly or annual interest rate to stimulate the good habit of gathering savings. Although these dividends are not high, discipline and years can generate an interesting benefit.
They do not usually include a debit card and may be subject to certain withdrawal restrictions, such as being able to withdraw money for free only 6 times a month.
Checking accounts
The checking accounts have various denominations in the financial culture: debit, current, personal, and even deposit demand account (United States). These instruments are designed for you to carry out your frequent transactions, such as paying bills, issuing checks, online transfers, cash withdrawals at ATMs, payroll payments, among others.
For this reason, it includes a debit card, a mobile banking app or the online bill payment option. Sometimes it is possible to get this type of accounts with interest-bearing, but usually are premium accounts with high requirements.
Very useful for daily management, you have to know how to choose the most appropriate checking account to avoid the different commissions linked to your hiring.
Money market accounts
They work in much the same way as savings accounts. They are so named because the bank or credit union uses them to invest in low-risk assets, such as government bonds, certificates of deposit (CDs), and more.
Furthermore, they tend to have higher interest than checking or savings and depend on federal rates.
These kinds of instruments are not designed for the long term, but to diversify the profitability of your money. Its advantages are the dividends, the use of a debit card and the inclusion of a checkbook.
Common drawbacks are related to a high minimum deposit ($5,000 to $10,000), the number of monthly withdrawals allowed (3 or 4), and no rate guarantees.
Certificates of Deposit (CD)
Among all the accounts mentioned, the CD is the one that allows you to obtain the greatest amount of profit by complying with the conditions of the financial institution.
This is because you have to commit the money for a certain period, from few months to several years. You get the dividends of the fixed interest rate when the established time expires.
The "problem" with this product is that you cannot withdraw the capital early, otherwise you will have to pay a penalty and you will not receive any profit. The recommendation is to compare the rates offered by banks, look for a CD that is close to the inflation rate and have other savings mechanisms.
Individual Retirement Accounts
The IRA is the last on this list and works as a fund to save money for the golden years. Its main advantage is that you do not have to pay taxes on deposits but on withdrawals. This means that the money grows as you pay and interest accumulates.
There are 2 modalities: traditional and Roth. With the first you pay taxes shortly after withdrawal and with the second, immediately. You have to be clear about the rules, consult an IRS expert and be familiar with its restrictions.
Español: Tipos de cuentas bancarias en Estados Unidos