Choosing the right bank will depend largely on the type of services they offer and the types of accounts you will need to use. Understanding the types of checking accounts can make a huge difference in deciding which bank you should use. While we all understand that checking accounts are predominantly used to manage your business transactions so you do not have to carry around cash in this day and age, there is a wide variety of checking account options that you’ll need to know about.
Online Checking Accounts:
Online checking accounts are probably the most convenient because you have no need of setting aside time to go into a brick and mortar building. Everything you do will be done online. They will usually automatically pay bills and accept direct deposits and transfers. These accounts will have a variety of checking options and when you need cash, you will be able to use the ATM debit/credit card at nearly any ATM found in the world.
According to Bankrate, if you have several thousand dollars or more in your checking account, a high-yield checking account might be appropriate for you. These accounts come with low or no monthly maintenance fees as long as you maintain your balance, and you’ll earn interest, which can help you build your reserves over time. (1)
Second-Chance Checking Accounts:
For anyone who may have a negative banking history, there are second-chance checking accounts. These accounts are usually set up for those who have been denied an account because of a previous history of overdrafts or other issues with their previous banks. You’ll more than likely be expected to pay a higher fee than you would with a standard account but it is a great option for those who cannot get any kind of account at all at a traditional bank. Understanding the types of checking accounts helps you to appreciate the value of having this type of account for those who may really need one while they are trying to restore their credit and financial reputation.
According to Nerdwallet, second chance checking accounts usually have monthly fees that can’t be waived, and they often carry more requirements than standard checking accounts, such as setting up direct deposit or completing a money management class. You typically can’t enroll in an overdraft program, since the point of a second chance account is to demonstrate that you can avoid overdrawing. (2)
Business Checking Accounts:
For small business owners, a basic business checking account is a good way to get your financial reputation established. These accounts usually earn interest if the balance is kept above the bank’s set minimum. The higher the balance the more interest you’ll make. However, if you don’t meet the bank’s minimum requirements you could end up paying a hefty monthly fee.
Express Checking Accounts:
If your banking needs do not require visits to the bank you can have an express checking account that allows you to do all of your banking through the ATM for no monthly fee. Think about what you will need from your bank and if you find that you don’t need a live teller transaction you could likely benefit from this type of account.
Today, everyone will do much better when they have a banking account. We are gradually turning into a cashless world where everything we purchase and all transactions will be done through cards, checks, and all sorts of vouchers.
Understanding the types of checking accounts and how they differ from each other will help prepare us for the future world of business. Knowing the different types of accounts and how they work can help you to decide exactly which bank will work best for you and help you to keep your money safely in place for when you need it.