Having money in the bank puts a smile on our lips and a spring in our steps. But is having two accounts going to make you any happier? Having the right number and type of bank account is vital to avoid paying excess fees and allowing you to manage your money effectively. Let us see the features of these accounts lest they prove to be ostentatious extensions that eat up our money.
Savings Account
With its modest interest rate, the quintessential savings bank account is the starting place for most bank users, though it would hardly be the predominant choice of someone who wants to make the most out of his or her capital. And yet, it serves its purpose. It secures the money in the bank and is readily accessible to the user at any time they want.
You have certain limitations on the mode of use by way of the number of withdrawal transactions and the amount of interest. On the flip side, you find the ease of use makes up for everything else. You can avoid monthly fees if you maintain a minimum stipulated balance. Financial institutions have a mandatory savings account because they use this fund to lend money to users. This savings account gives you a separate source of money apart from any other you use for your daily needs.
While you may use it for your kids, it doesn’t come with a debit card facility to make purchases. To improve your savings account balance, make regular deposits from another bank account or you can make a big deposit to take care of this.
Checking Account
This basic bank account allows you to do check deposits, pay bills, and make withdrawals. Checking accounts envisages the use of online and paper checks, though the latter is fast losing popularity as a financial instrument.
Debit cards have taken over the role of the paper check so that you are now able to pay bills online using your checking account. Thus, it remains trusted by users because it is manageable, making it easy to use. But you must remain wary of fees for various services that may amount to a huge number by the end of every month. Do you want this account? You should inquire about it if you want the online payment feature.
To avoid paying undue fees and detect fraud in time, balance the checking account each month. Also, deposit your wages directly into checking. This will help you to get your money fast. Use a credit card instead of a debit card for your daily expenses.
Certificate of Deposit Account
This kind of account will help you earn more through your deposit compared to the options listed above. The catch is that you must keep the money in the CD account for a stipulated period — such as 12 months or 18 months. If you have money that you don’t want in the immediate present, the CD Account is a good option to earn interest on your capital.
Earning money by keeping it locked up is good if you really want to save properly. One is that it remains safe out of the way of daily transactions so that it will be there in full when you need it. Secondly, it earns a good rate of interest. Since this brings in more money than the other two kinds of bank accounts, you will do well to use this. The shortcoming is that you must not withdraw early or you will have to pay a penalty. Also, you can set up a CD ladder that allows you access to a part of your money on a regular basis. A few banks allow you the flexibility of withdrawing money early, but then again, some refuse to consider early withdrawals at all. So, check this aspect before you decide to open a CD account.
One size doesn’t fit everyone. People who live from paycheck to paycheck may need a tangible method of accessing and using money. A savings account alone might not prove enough since the method of withdrawal and transactions remains limited. A second checking account becomes necessary. A separate savings account will help you save money regularly.For those who have extra money, a CD account is useful. The financial decisions you make will depend on the kind of bank account you have, so choose one with care!
FAQs
Budgeting with multiple bank accounts could prove easier than with only one. Multiple accounts can help you separate spending money from savings and household money from individual earnings. Tracking savings goals. Having multiple bank accounts may help track individual savings goals more easily.
Do I need to have bank account for loan? ›
Yes, there are some loans that won't require the borrower to have a bank account. Typically, these types of loans are ones that are designed for borrowers with low credit scores. But whether or not the lender requires a bank account will depend on their specific eligibility requirements.
Do you really need multiple bank accounts? ›
Really, there's no hard and fast rule about how many checking accounts any one person should have. The number and type of accounts that works for you will depend on many factors, including your financial goals, spending habits, and comfort level with monitoring and managing multiple accounts.
Can you apply for a loan without a bank account? ›
While it's not impossible to get a loan if you don't have a bank account, it can be difficult to get approved, will likely cost more in interest and fees, and may require collateral to guarantee the loan. However, if you need money fast, there are options available.
Why do people need two bank accounts? ›
Having multiple bank accounts often allows you to perform tasks unavailable with other accounts. It also opens access to additional banking benefits, such as separating your savings by goal or purpose, earning interest, or automatic savings and budgeting features.
Is having multiple bank accounts bad for credit score? ›
Will having two or more current accounts damage my credit score? Not necessarily, no. However, having two or more current accounts won't necessarily damage your credit score, but it could have a negative impact if you start dipping into multiple overdrafts – making it look as if your finances are becoming stretched.
Which bank gives a personal loan easily? ›
HDFC Bank offers pre-approved loans to customers in 10 seconds flat*. Non – HDFC Bank customers can get loans in 4 hours.
Do lenders need your bank account number? ›
Although the requirements can vary from bank-to-bank, some of the most common types of information required when verifying bank statements include: Account number. Account type, such as a checking, savings, individual retirement account (IRA), or certificate of deposit (CD) Open or closed status and open date.
What do banks require before a loan is approved? ›
Most personal loan lenders review your credit score, credit history, income and DTI ratio to determine your eligibility.
Does closing a bank account hurt your credit? ›
The act of closing a bank account, such as a checking or savings account, does not directly affect your credit score. Your credit score is not directly affected by your checking and savings account activity. That includes account closures.
While having multiple accounts can have its perks, it can also lead to confusion and complicate your financial life. If you find it hard to keep track of all the accounts and their balances, it's best to stick to one or two accounts.
Is it illegal to have two bank accounts with different banks? ›
Yes, it is legal to open up multiple bank accounts in the US. Many people in the US have both a Checking and Savings account with one bank. Although around 50% of American's stick to one bank, the other half of Americans have bank accounts at multiple banks.
What are the payments on a $50 000 loan? ›
The monthly payment on a $50,000 loan ranges from $683 to $5,023, depending on the APR and how long the loan lasts. For example, if you take out a $50,000 loan for one year with an APR of 36%, your monthly payment will be $5,023.
Do personal loan companies check your bank account? ›
In some cases, a lender might ask for your bank account number to know where to send the loan funds after your application has been approved. Some online lenders may ask you to connect a business bank account to analyze and verify your revenues to see whether you qualify for an online loan.
Can I get a loan with just my debit card? ›
Debit card funding loans are extremely flexible.
However, they're typically used as a type of “payday loan”. As such, most applicants apply for debit card funding loans when they don't have enough money to get to their next payday and they need funds now.
Is it safer to have 2 bank accounts? ›
If you have more than $250,000 in your bank accounts, any money over that amount could be at risk if your bank fails. However, splitting your balance between savings accounts at different banks ensures that excess deposits are kept safe, since each bank has its own insurance limit.
Is it okay to have 2 accounts in one bank? ›
While the rules may vary depending on the bank, the short answer is generally yes, you can have multiple checking accounts with the same bank. However, there are some important things to keep in mind before you decide to open a second account, such as fees, interest rates, and account requirements.
How many bank accounts should a person have? ›
While there's no limit to how many Savings Accounts you can have, there are a few things to consider before signing up for more than one. According to financial experts, it isn't advisable to open more than three Savings Accounts, as it can be difficult to manage.
With its modest interest rate, the quintessential savings bank account is the starting place for most bank users, though it would hardly be the predominant choice of someone who wants to make the most out of his or her capital. And yet, it serves its purpose. It secures the money in the bank and is readily accessible to the user at any time they want.
This basic bank account allows you to do check deposits, pay bills, and make withdrawals. Checking accounts envisages the use of online and paper checks, though the latter is fast losing popularity as a financial instrument.
This kind of account will help you earn more through your deposit compared to the options listed above. The catch is that you must keep the money in the CD account for a stipulated period — such as 12 months or 18 months. If you have money that you don’t want in the immediate present, the CD Account is a good option to earn interest on your capital.