Ben Todd | Jun 2, 2017 | 1
The Different Types of Bank Accounts Explained
Ever meet somebody that seems to have a lot of cards in his or her purse or wallet? Ever meet somebody that seems to have many accounts? It may be that the person you are speaking to is in massive debt, or it may be that the person has great control over his or her money and simply has numerous accounts to ensure he/she is making good use of his/her money.
How many bank accounts do you really need?
Here are the most common accounts, along with reasons why you should need them. Most people are going to need many of these accounts in order to function today and to prepare for the future.
Isn’t this an essential account for most people? If you are not saving, then what are you doing with your money? The foundation of security in a capitalist system is to build enough resources so that you can suffer months, if not years, without an income. If you do not have a savings account, then the money you have is not earning interest, which may mean it loses its value over time.
You increase your chances that your money will be worth more in the future if you have a savings account that earns interest. Even if your savings account does not earn interest, it is common sense to put money away so that you do not spend every penny you earn.
It may also be known as a current account or debt account. It comes with a card that may also be called a visa or debit card. Your current account is a free (usually) account that you use to store your money.
A current account will have the ability to store and move money to different accounts. The card that comes with it will allow a person to buy things in shops and to draw money out of ATM machines.
The account will also be able to link to other accounts so that money may be drawn out of it, paid into it, and debited or paid in a routine fashion. It is the account that most people have their wages or benefits paid into.
It is possible to run a business without a business account, but business accounts often have functions that save time and effort for the business owner. The tax office may also be upset if you are mixing your personal income and personal spending with your business income and spending. A business account may also be more secure, or may be accessed by staff members and accountants.
Some banks allow people to have an investors account, also known as a brokerage account, and with it a customer may buy and sell shares. Money is loaded into it and the money is used to buy stocks, shares and other financial products. The balance of the account is how much it is worth in monetary terms and only gives a rough idea of the actually monetary value of the portfolio.
Some also know this as a credit card, but it can be operated without a card. It is an account where a certain amount of money is agreed to be lent on an overdraft basis. The customer pays interest on the money that has been borrowed. The amount of interest will vary from month to month depending upon how much has been borrowed.
Online Third-Party Account
These days a third-party account is almost essential because it lowers a user’s risk of having their bank accounts cleared. A third-party account is an account that people can use to buy things online and to send money online, but that doesn’t require the user to enter card details.
For example, a user may send money to another person’s third-party account with as little information as their email address. People may buy from a variety of different websites without having to divulge personal information. They are especially useful for people putting money into betting websites too. The most popular third-party accounts are called PayPal, Skrill and Google Wallet.
People can load money into their accounts and then spend that, or they can have the third-party account send instructions to a bank to debit money from the account. This allows the user to buy things or spend money online even if the third-party account is empty. The account simply debits it from the user’s account, which is then sent to wherever the user spent the money.
Children’s Bank Account
This is an account that allows the child a limited amount of access to the money in the account, whilst allowing the parent or guardian to administrate the account and watch over the money. There are some accounts that will not allow the child to buy certain things. For example, there are some accounts that will not allow a child to purchase pornography, 18+ material, or to put money onto gambling sites.
There are accounts that will stop the child from being able to draw out or spend large amounts, and it will not allow the child to overdraw either. There are accounts that limit what the child is able to do with the account, which also helps guard against thieves trying to steal money from the card.
There is a good chance that you will have a pension account at some time in your life. Some people have their pension handled completely by their work, and other people start their own pension. The people that have their own account are able to add money to it both routinely and in an ad-hoc manner, plus they are able to see their account balance so they may see how their money is growing.
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Many people are able to see their mortgage account on their bank balance screen. People are able to have mortgage accounts that shows how much they owe. There are even some accounts that explain how their money is broken down into money owed and interest owed. The account balance allows people to see how much they still have to pay, and lets them see how long it will be before their mortgage is paid off.