The different Types of Bank Accounts

Bank accounts can be broken into four main categories: (1) checking; (2) savings; (3) investment; and (4) credit.  Many banks will offer all four different main types of accounts, but not all banks will.  The “investment” account will most likely be the type of account, if any, that a bank is missing.  However, this does not mean that the bank is bad or is not worth a look.


Checking accounts are the bread and butter of most banks.  A checking account allows you to deposit money and write checks or otherwise withdraw money from that account in order to pay bills or pay for merchandise that you want to buy. 

Many banks used to require a minimum deposit amount that you must maintain at all times in order to avoid fees.  Additionally, many banks used to charge numerous fees for the checking account, such as check writing fees and monthly maintenance fees.  However, as competition has increased and as the Internet has become more ingrained in the financial industry, many banks offer some sort of “free checking.”  “Free checking” accounts generally allow you to write as many checks as you want without charging a fee.  Additionally, “free checking accounts” generally do not require an account minimum balance.  Therefore, you can have $1 in your checking account, or less, and you will not be charged a fee.


Savings accounts come in many different forms (such as a savings account, a certificate of deposit, or a money market account, to name a few), and allow you to deposit money with a bank.  While on deposit, your money earns interest at a rate designated by that bank.  Each bank is different and interest rates can vary from anywhere between 0.10% annually to 5.00%+ annually. 

Savings account generally do not allow you unlimited withdrawals.  Therefore, if you make more withdrawals than is permitted per month, you will have to pay a fee. 

The savings account allows you to put your money to work for you.  However, because the interest rate is small, the returns will also be small.  As such, do not expect to get rich off your savings account.  However, a savings account is a great way to earn money on your idle cash.


An investment account allows you to trade stocks and other securities.  Investment accounts may be offered by your bank but are not subject to the same protections as your deposit accounts (such as your checking and savings accounts).

Investment accounts fluctuate in value as the stock or security you purchased fluctuates, and generally does not carry an interest rate.  Therefore, if you are not trading stocks, your idle money sits in your investment account not doing anything.

Banks charge a fee for each trade you make (usually a flat fee per trade) and generally do not have any monthly maintenance fees.  Usually, however, banks require a minimum amount (usually between $500 – $2,000+) to open an account.


Credit accounts include any kind of loan or credit card you can get from the bank.  The most common credit account is a credit card, but can include home loans and auto loans, to name a few.

You have to apply for a loan or a credit card in order to try to open a credit account.  If you are approved for the loan or credit card, your credit account will be opened and you can use the loan or credit card as determined by the bank’s terms.

Remember, checking, savings, investment, and credit accounts are the four primary types of accounts that you can obtain from your bank.  Check your local branch to see if you can take advantage of any or all of these types of accounts.