Although online personal banking accounts vary by bank, they typically fall into one of four category types: checking, savings, money market and certificate of deposit, states InvestorGuide.com. Each account type offers different opportunities and restrictions.
Checking accounts allow the deposit and withdrawal of funds as needed. They typically do not accrue interest, however, according to CNN Money. Customers with high average account balances are more likely to qualify for interest-bearing checking accounts than customers with low average balances. Fees associated with checking accounts often fluctuate according to trends in the banking industry, reports Forbes.
Savings account holders can store funds, earn interest on those funds, and make withdrawals and transfers on a limited basis. Consumers must exercise caution when using a savings account or any other interest-bearing account, CNN Money advises. Because the interest rate banks use is often lower than the inflation rate, it is possible to lose purchasing power, especially if the average account balance is low.
Money market accounts invest your money short term. They earn interest rates like a savings account and allow at-will withdrawals like a checking account. Transfers are limited to six per month, reports InvestorGuide.com
Certificates of deposit remain open for a specified amount of time and at a specified interest rate.
The initial deposit requirement is about $2,500, says CNN Money. The longer the money remains in the account, the higher the interest rate climbs. Because withdrawing funds before the maturity date carries significant penalties, it is best not to open one for short-term cash needs, according to InvestorGuide.com.