When you’re figuring out where to keep your money, you’ll come across several types of bank accounts. The four basic types are checking account, savings account, certificate of deposit and money market account.
Each kind of account serves a different purpose. For instance, a checking account is geared toward covering everyday expenses, while a savings account is designed to help achieve short-term financial goals.
Learn about the four basic types of bank accounts, including key features and how to open an account.
[Read: Best Online Banks.]
Checking Account
A checking account enables you to safely store money for everyday expenses like rent, groceries and utility bills. Typically, a checking account lets you make payments with a check or through a website or app. In addition, an account holder usually gets a debit card to make in-person or online purchases, and to deposit or withdraw money at ATMs and other places.
Here’s how to open a checking account:
— Decide where to open the account — a traditional bank, online-only bank or credit union.
— Look into the fees you’d be charged.
— Fill out an application, either in person, over the phone, online or via an app.
— Provide your Social Security number, individual taxpayer identification number, passport number or another government-issued ID number.
— Supply personal data, including your name, address and date of birth.
— Make an initial deposit (perhaps $25 to $100).
Types of checking accounts include free checking, high-yield checking and business checking.
Free Checking
A free checking account charges no monthly maintenance fees. Furthermore, it doesn’t require carrying a minimum balance to escape fees. While a free checking account doesn’t hit customers with monthly maintenance fees, you may still face fees such as ATM fees and overdraft fees.
High-Yield Checking
Many checking accounts pay little or no interest. On the other hand, a high-yield checking account enables you to earn a relatively generous annual percentage yield, or APY, on your deposits.
In exchange for a healthy APY, you might need to maintain a high minimum balance, sign up for direct deposit or make a certain number of minimum transactions. You also might be charged fees if you fail to meet account requirements.
Business Checking
A business checking account allows a small business to make deposits and withdrawals, write checks, pay bills, make purchases and carry out debit card transactions. Two of the advantages of a business checking account are that it separates business funds from personal funds and simplifies the process of maintaining tax records.
[Read: Best Checking Accounts.]
Savings Account
A savings account, which earns interest, primarily serves two purposes:
— Setting aside money for short-term financial goals, such as a vacation or a down payment on a car.
— Creating an emergency fund.
A savings account generally doesn’t let you write checks and doesn’t offer debit cards. Savings accounts normally offer ATM cards, though. An ATM card allows an account holder to withdraw money at an ATM. Some financial institutions might limit the number of savings withdrawals or transfers you can make each month.
Here’s how to open a savings account:
— Compare options at banks and credit unions.
— Look at the APY you’d earn.
— Check out the fees.
— Fill out an application, either online, via an app, over the phone or in person.
— Supply personal data, such as your name, date of birth, address, Social Security number and driver’s license number.
— Make an initial deposit.
High-Yield Savings Account
pays an APY that far exceeds the national average for savings accounts. As of June 2025, the average interest rate for a savings account was 0.38%, according to the Federal Deposit Insurance Corp. Meanwhile, a number of high-yield savings accounts were paying APYs above 4%.
Certificate of Deposit
A certificate of deposit, or CD, is a type of savings account.
Unlike traditional savings accounts, the APY and withdrawal date for a CD are fixed. The average rate for a one-year CD was 1.62% as of June 2025, according to the FDIC.
Generally, CDs provide higher APYs than high-yield savings accounts.
Withdrawing money from a CD before the agreed-to period ends may result in an interest penalty. You typically can’t make additional deposits after the initial deposit.
Here’s how to open a CD:
— Shop for a CD that offers a high APY while charging low or no fees.
— Pick a financial institution (bank, credit union or investment firm).
— Select the term, such as six months or five years.
— Complete the application, either online, via app, in person or over the phone.
— Provide personal data, such as your name, address, Social Security number and driver’s license number.
— Make a deposit.
[Read: Best CD Rates.]
Money Market Account
A money market account is an account that earns interest and is similar to a savings account. MMAs can help you meet short-term or long-term financial goals.
What sets MMAs apart from savings accounts and checking accounts is that they typically offer higher interest rates, require higher minimum balances and opening deposits, and restrict certain withdrawals and transfers.
As of June 2025, the average interest rate for an MMA was 0.59%, according to the FDIC. However, some MMAs were paying APYs above 4% in June 2025.
[Read: Best Money Market Accounts.]
Here’s how to open a money market account:
— Compare options at banks and credit unions.
— Explore the available APYs.
— Look into the fees you’d be charged.
— Choose a financial institution.
— Fill out the application.
— Provide personal information, including your name, date of birth, address, Social Security number and driver’s license number.
— Make an opening deposit.
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What Types of Bank Accounts Are There? originally appeared on usnews.com
Update 06/30/25: This story was previously published at an earlier date and has been updated with new information.
