Types of bank account

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Types of bank account:
There are two types of bank account for managing everyday money: a basic bank account and a current account. Banks also offer a range of accounts designed for medium or longer-term savings. Savings or 'term' accounts usually pay more interest than current accounts.

Basic bank accounts:
Basic bank accounts offer a convenient place to keep money you need for everyday use. You can arrange to have wages, State Pension and benefits or tax credits paid into one. You can also pay in cheques or cash free of charge, and set up 'direct debits' which pay regular bills automatically from your account. With a basic bank account you get a cash card which you can use at a bank machine to withdraw cash. Some also offer a 'debit card' that you can pay for items with, and get 'cashback'; but with a basic account these will only work if there's enough money in your account. You don't get a cheque book with a basic bank account, and you can't take out more money than is in the account ('go overdrawn'). For this reason basic bank accounts are useful for anyone worried about overspending.

Current accounts:
Current accounts have more features than basic bank accounts. For example, they usually offer:
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cheque book cheque guarantee card (acts as a 'guarantee' so makes cheques more widely acceptable) debit card (some allow payments without checking your account) direct debits (automatic bill payments direct from your account) standing orders (regular set payments from your account to someone of your choice) BACS (Bankers' automated clearing service) - the facility to accept payments directly into your account (e.g. from your employer), or for you to make one-off payments to someone else out of the account overdraft facility - the bank may allow you to go overdrawn up to a certain amount; but you need to arrange this in advance and charges apply (you pay extra charges if you go overdrawn without an agreement)

Some current accounts pay interest on money you leave in the account, but the rate is usually low.

Savings Accounts:
Banks offer a wide range of savings accounts. The main differences between them are how quickly you can get at your money, the minimum amount required to keep the account open and the type and rate of interest paid Many credit unions offer savings accounts, where you can pay money in and take money out. You can also have your benefits or wages paid straight into some Credit Union accounts. Some Credit Unions offer budgeting accounts, where you pay in a set amount each week/month and they then pay agreed household bills as they become due. A few Credit Unions now also offer current accounts and the 'moneylines' can also help you to open an account. Money Market Account: This type of bank account pays interest at a higher rate than the rate paid on interest- bearing savings and checking accounts. Often, money market accounts impose a minimum balance for the account to start earning interest. The minimum required balance on a money market account is usually higher than that imposed on a checking or savings account. With a money market account, withdrawals are limited to six per month. No more than three of these withdrawals can be by check. Checking Account: it is a bank account that uses checks as the primary instrument for withdrawing money. With a checking account, you can make purchases, pay bills, and give or loan money to anyone you choose. You can also use a check to transfer money from your checking account to a bank account at a different financial institution. Usually, financial institutions allow account holders to make as many deposits and withdrawals as they wish. Many allow account holders to make withdrawals and deposits through automatic teller machines (ATM) as well. No-frills Bank Accounts: A no-frills bank account may allow the holder to pay bills and cash checks without paying the high fees associated with completing such transactions without an account. An account of this type will likely allow for only a limited number of checks, deposits, and withdrawals to be processed in any given month. In most cases, interest is not paid on a no-frills bank account.

Time Deposit Account/Fixed Deposit Account:
A no-frills bank account may allow the holder to pay bills and cash checks without paying the high fees associated with completing such transactions without an account. An account of this type will likely allow for only a limited number of checks, deposits, and withdrawals to be processed in any given month. In most cases, interest is not paid on a no-frills bank account.

Joint Bank Account:
Basically, a joint bank account is an account opened by two individuals in a financial institution for the purpose of saving their combined earnings in a safe place. Joint bank accounts are commonly opened by those who are in a close personal relationship with each other or those who engage in business with the purpose of pooling their financial resources together. The persons and individuals who usually use joint bank accounts are married couples or family members because they find it more convenient to use regarding their financial transaction matters. One of the most important conveniences of opening a joint bank account is that the account allows each person to deposit or withdraw money anytime with the other person's authorization. One can withdraw money from the account in behalf of the other account co-owner. He or she can pay bills, purchase properties, use the money for himself or in behalf of the other. Basically, each co-owner has full access to the deposited money. When opening a joint bank account, one primary consideration is that it should be opened with a trusted individual. It one has a joint bank account with a family member because trust naturally exists between the two joint account holders -however, this is not the general rule. Issues arise when it comes to joint bank account shared by individuals in a business relationship. When the relationship between the two turns unfriendly, managing the bank account's finances becomes complicated. One thing to consider also in opening a joint account is that the shared account owners should have a clearly agreed terms regarding depositing and withdrawing of the money, and its subsequent use so as not to foster misunderstanding. Without these agreements, the money may be misused or spent anywhere without the knowledge of the other individual. As stated, trust between the two shared account owners should be the primary consideration. The deposited money should only be used as agreed and for the benefit of mutual financial growth of the two joint bank account owners.

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