While you can technically manage your money out of a single checking account, having only one account will probably make you miss out on rewards and high-interest rates. Here, we’ve listed 3 types of bank accounts that everyone should have to effectively manage everyday expenses and long-term financial goals.
- No-Fee Checking Account: It’s important to have a checking account since it will help you manage your day-to-day transactions. However, if your bank is charging you a monthly or annual fee to maintain your checking account, you may want to switch to a bank that doesn’t. Given that consumers now have more choice than ever before, switching to a bank that doesn’t charge you fees to maintain a checking account will help you save a good amount of money every year.
- High-Interest Savings Account: You need to have at least one savings account. You could use this account to build your emergency fund. Even if you have a secure job, it makes sense to build an emergency fund with enough cash to help you cover your living expenses for at least 3-6 months. Of course, based on what your financial goals are, you may want to have more than one savings account for different financial goals like saving up for a down payment, buying a car, etc.
- Investment Account: In addition to managing your daily expenses, you also need an investment account that will help you secure your future. The money that you set aside for your retirement should ideally earn you a high rate of interest that will beat inflation. If you’re just getting started with investments, you may want to consider a robo-advisor or low-fee mutual fund. If you are comfortable taking investment decisions yourself, you can open an investment/brokerage account for yourself.
In addition to the above-mentioned accounts, you should also try to get yourself a rewards credit card. While it isn’t technically a type of bank account, you still need it, given that it can help you earn rewards, build your credit score, and make transactions securely.
Before you open any type of account, ensure that you review the fees and charges associated with the account. Make sure to not open accounts that have extremely high fees, since you’ll probably end up spending more on the account than what you earn in interest.