Types of bank accounts in the US, explained
In short: most people need a checking account for everyday spending and a savings account for money they keep aside. Money market accounts and certificates of deposit (CDs) can pay more interest in return for a higher minimum balance or locking your money away. At an insured bank or credit union, all of these are protected up to the deposit insurance limit.
Checking account
A checking account is for money you use day to day. It usually comes with a debit card, checks, online bill pay and direct deposit, so your employer can pay your wages straight into it. Many pay little or no interest. Watch for monthly fees, minimum balances and overdraft fees.
Savings account
A savings account holds money you don't plan to spend soon, such as an emergency fund. It pays interest, shown as the APY (annual percentage yield), and the rate can change at any time. Some banks limit how many withdrawals you can make each month, so ask before you open one.
Money market account
A money market deposit account is a type of savings account that often pays a higher rate but may need a larger minimum balance. Some come with a few checks or a debit card. Don't confuse it with a money market fund, which is an investment sold by brokers and is not covered by deposit insurance.
Certificate of deposit (CD)
With a CD you leave a fixed amount with the bank for a set term, such as 6 months or 1 year, at a rate that is usually fixed. Taking money out early normally costs a penalty. Credit unions call these share certificates. Our guide What is a CD? explains them in detail.
Other accounts you may see
- Joint account: owned by two or more people, such as spouses. Each owner can usually use all the money, so only share an account with someone you trust completely.
- Student or young adult account: often has lower fees for people in school or under a certain age. Check what happens when you no longer qualify.
- Second-chance account: for people who were turned down because of past banking problems. Fees can be higher, but it can help you get back to a standard account.
- Prepaid card: not a bank account, but you load money onto it and spend with it. Fees vary a lot, so read the fee list on the package or website.
Quick comparison
| Account | Best for | Access to money | Interest |
|---|---|---|---|
| Checking | Everyday spending and bills | Any time | Little or none |
| Savings | Emergency fund, short-term goals | Easy, may be limited | Variable |
| Money market | Larger savings balances | Easy, may be limited | Variable, often higher |
| CD | Money you won't need for a set time | At the end of the term | Usually fixed |
Is my money safe?
Checking, savings, money market deposit accounts and CDs at an FDIC-insured bank are covered up to $250,000 per depositor, per insured bank, for each account ownership category. Credit union accounts have the same level of cover through the NCUA. Stocks, bonds, mutual funds and crypto are not deposits and are not covered, even if you buy them through a bank.
New to US banking? Start with Opening your first US bank account.
Handy tools
- Monthly budget planner: see what is left each month and how your spending splits up.
General information, not financial advice. Rules, fees and rates change and depend on your situation. Check with your bank, the provider or a qualified professional before you decide.