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Know the Differences Between a Savings Account, a Checking Account and Certificates of Deposit.

In order to open an bank account, it is essential to previously know the services that they are going to offer, the characteristics of each account, their benefits, interests and all the details that allow you to make a correct decision about the one that best suits your main need.

Remember that acquiring these types of accounts or banking services is essential to build a credit life in the United States and the access they can give you to loans, housing rentals and even obtaining jobs will depend on your financial records. In other words, it will depend on the good management of  the services aquired with the financial entities.

This article will provide you with information about the differences between savings accounts, checking accounts, and certificates of deposit to  identify the regulations and select the one that best suits your lifestyle.

Savings account: When you acquire a savings account with a bank, you will have the possibility of accruing interest on the money you are saving and using it in the future as required. This type of account allows you to accumulate interest on the funds you save for future needs. Interest rates can be compounded on a daily, weekly, monthly or annual basis, however, you should verify with the entity the type of service they recommend.

Savings accounts are a good option to keep money secured and use it in any emergency that arises. You can separate the money you spend each month and save the rest in this account that will grow depending on the interest you are being paid. Ideally, you keep the savings in this account, but if you need to withdraw it for any reason, you can do it whenever you want.

Checking account: A checking or checking account is ideal so that your money is safe and can be accessed at the time you need it, through checks or debit cards. It is very common to use this type of account to deposit the money corresponding to your work, pay the rent of your home, withdraw money from ATMs, transfer money to other accounts, access your money to make payments through checks, etc. This type of account does not have many requirements to proceed with its opening.

Certificate of Deposit: Certificates of Deposit (CDs) are a low-risk type of investment. Usually, you can receive a slightly higher interest payment compared to what you receive for having a savings account, however, you must keep your money in the bank for a specific time to access this benefit , that is, , that you cannot wittdraw it until the date that you have established in common agreement with the bank.

The interest rate that is managed in this type of account is “fixed” during the period that has been determined. It is important that you are sure that you will not need to withdraw the money before that time because you may have to bear some consequences related to non-compliance.

Invest time to compare the services and charges offered by each entity either a bank or a credit union, because there may be significant differences between them, ask if there are costs for maintaining your checking account, for using debit cards, for withdrawing money from ATMs in banks other than the bank where you have your account, and what may happen if you spend more money than you already have in your account. These are some tips that you should keep in mind when visiting or investigating the places you have pre-selected to access the services.