Which bank account is best for you
What is a savings account?
A savings account is probably the simplest type of account available that is used to deposit and withdraw money. There are very few, if any, qualifying criteria to open a savings account, and the account holder will receive a debit card that can be used to withdraw/deposit money from ATMs as well as to purchase items at point of sale terminals, online and through cellphone banking.
Benefits: It is one of the easiest types of accounts to open with low monthly fees. Some accounts offer small amounts of interest over time, and money is easily accessible to you, should you need to withdraw it.
Drawbacks: Savings accounts pay very little interest, and there are specific limits on the number and type of transactions that you can make each month.
What is a cheque account?
A cheque account is a transactional account held at a bank that allows you to deposit and withdraw money from it. This type of account is more sophisticated than a savings account, and is ideal for individuals earning a regular monthly income. The account holder will receive a debit (cheque) card that can be used to withdraw/deposit money from ATMs as well as to purchase items at point of sale terminals, online and through cellphone banking. Payments via stop orders and debit orders can also be made from a cheque account, and the account offers an overdraft facility if you need to borrow small amounts from the bank.
Benefits: Cheque accounts are offered by most banks for minimal to moderate fees. Your money is also easily accessible to you whenever you need it, and many cheque accounts are linked to rewards programmes.
Drawbacks: Monthly fees are higher than savings accounts, and cheque accounts offer very little, if any interest on your money. Many accounts also require you to receive a minimum monthly income into the account – or certain fees will be charged. And if you go into a negative balance (overdraw), you’ll be charged high overdraft fees.
What is a money market account?
A money market account is a premium investment interest-bearing account that pays a higher interest rate than a savings or cheque account. These accounts typically have higher minimum balance requirements and unlike a fixed deposit there is not a defined investment term, so funds can be invested into the products indefinitely and the rate of return may vary depending on the deposit balance. A money market account is a good investment for a risk-averse consumer.
- Benefits: Money market accounts offer higher interest rates than other accounts, and compared to other investment products such as equity or balanced funds, management fees are low. They also offer easy access to funds when you need to withdraw from the account.
- Drawbacks: Account holders are required to maintain a high minimum balance in the account, and most money market accounts only allow a limited number of withdrawals and transfers each month. Interest rates also fluctuate according to the overall market interest rate, so can never be at a fixed rate.
What is a credit card account?
A credit card is a card issued by a bank that allows you to purchase goods or services in-store or online on credit. You can also use your credit card to withdraw cash from an ATM. You will be given a limit of what you can spend on your credit card based on your earnings and credit history.
If you do not pay off your balance in full at the end of each month – the 30 day interest free period – your bank will charge you interest on the amount remaining on your account.
- Benefits: If you’re able to keep your expenses in check a credit card offers great flexibility and is often linked to different rewards programmes. You’re also able to build a credit rating which is important to help you get the best interest rate on loans.
- Drawbacks: Many consumers find themselves running into trouble with a credit card, as they lose track of spending and struggle to repay their debt. Annual, hidden and interest costs can quickly add up, and if you miss payments you credit rating will suffer.