Bank accounts are essential tools for managing your money and achieving financial goals. Whether you’re looking to streamline everyday transactions, save for future expenses, or build wealth over time, there’s a type of bank account designed for each purpose.
In fact, most Americans rely on these financial tools regularly. According to SoFi’s April 2024 Banking Survey of 500 U.S. adults, 88% of respondents reported having a checking account, while 71% said they had a savings account. These numbers reflect how foundational these accounts are to everyday life.
Understanding the differences among account types can help you choose the right combination for your needs. Below, we explore seven common types of bank accounts, their features and benefits, and how they can fit into your financial plan.
Key Points
• Checking accounts provide quick access to funds for everyday spending and transactions.
• Savings accounts allow you to store money for emergencies and short-term goals while earning interest.
• Certificates of deposit offer fixed interest rates and guaranteed returns but lock up funds for a set period of time.
• Money market accounts combine higher interest rates with checking account features.
• Brokerage accounts allow for diverse investments with potential for growth but also come with market risk.
7 Types of Bank Accounts Explained
Choosing the right mix of bank accounts can make it easier to manage your money and bring you closer to your goals. Here’s a rundown of the different types of bank accounts, how they differ, and how each can support your financial journey.
1. Checking Account
A checking account is often the hub of your financial life, where your income flows in and your day-to-day spending flows out.
Key features:
• Opening a checking account is typically quick and easy, and these accounts are widely available through traditional banks, credit unions, and online banks.
• Checking accounts typically come with a debit card and checks for convenient spending.
• Checking accounts are typically insured by the Federal Deposit Insurance Corporate (FDIC) or National Credit Union Administration (NCUA) for up to $250,000 per account holder, per ownership category (such as single accounts, joint accounts, or trust accounts), per insured institution.
• Some checking accounts charge monthly fees, but offer ways to waive them, such as maintaining a certain minimum balance or setting up direct deposit.
Because checking accounts usually pay little or no interest, they geneally work best for short-term storage and daily use, rather than long-term saving.
2. Savings Account
Savings accounts are designed to help you set aside money for future use while earning interest.
Key features:
• Savings accounts generally earn more interest than checking accounts, especially high-yield savings accounts found at online banks. In SoFi’s survey, 23% of respondents said they have a high-yield savings account.
• Savings accounts are typically FDIC- or NCUA-insured.
• Savings accounts are ideal for short-term money goals or emergency funds, rather than day-to-day spending.
How People Use Their Savings Accounts
| Purpose | % of Respondents |
|---|---|
| Emergency savings | 77% |
| Specific goals (e.g., vacation) | 52% |
| To earn interest | 48% |
Source: SoFi’s April 2024 Banking Survey
• Savings accounts usually don’t come with checks or debit cards, making the funds less accessible than money stored in a checking account.
• While the federal regulation that limited withdrawals from savings accounts to six per month was suspended in 2020, some banks still have savings account withdrawal limits, and will assess fees if customers exceed those limits.
• Some savings accounts require a minimum balance and will charge a monthly maintenance fee if your balance goes below that threshold.
A savings account can be a good place to build your emergency fund and/or save for a short-term goal, such as a vacation, a new car down payment, or a home renovation.
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3. Checking and Savings Account
Some financial institutions, especially online banks, offer hybrid checking and savings accounts that combine characteristics of both types of accounts.
Key features:
• Checking and savings accounts at online banks typically offer higher annual percentage yields (APYs) compared to traditional savings accounts.
• These accounts allow convenient access to funds — you can spend through debit cards, checks, and mobile payments, similar to a traditional checking account.
• Online banks often have fewer and/or lower fees compared to traditional banks.
• Checking and savings accounts are typically FDIC- or NCUA-insured.
• These accounts often come with conveniences like automatic savings tools and budgeting insights that can make it easier to track spending and saving.
Having checking and savings features combined within one account can help simplify managing your finances and make it easier to monitor your overall financial picture.
Alternatively, you can open both a checking and a savings account at the same financial institution or at two different banks, then link the accounts for easy transfers. Having multiple bank accounts can help you manage both daily transactions and short- to mid-term savings effectively. In SoFi’s survey:
• 31% of respondents said they had two checking or savings accounts
• 20% had three accounts or more
• 37% had just one checking or savings account
4. Certificate of Deposit
A certificate of deposit (CD) is a type of savings account that locks in your money for a set period of time in exchange for a fixed interest rate.
Key features:
• Term length typically ranges from a few months to several years or longer. Longer terms tend to come with higher interest rates, although this isn’t always the case.
• CDs typically have a minimum deposit, often starting at $500 and up.
• Withdrawing funds early typically results in penalties, unless it’s a no-penalty CD. No-penalty CDs generally offer lower interest rates than traditional CDs.
• CDs are usually FDIC- or NCUA-insured.
CDs can work well if you’re saving for specific, near-term goals. For example, If you’re saving for a down payment on a house or a car purchase within the next few years, a CD with a matching term can help you reach that goal with guaranteed earnings.
5. Money Market Account
A money market account (MMA) is a type of savings account that offers some of the conveniences of a checking account.
Key features:
• MMAs typically offer better interest rates than traditional savings accounts.
• MMAs usually come with a debit card and checks, making it easy to access your funds.
• Like other types of savings accounts, MMAs may be subject to monthly withdrawal limits, and you may get hit with fees if you exceed those limits.
• Many MMAs require a minimum balance to open the account and/or to earn the advertised rate.
• Some MMAs charge monthly maintenance fees, though you may be able to waive them by maintaining a certain minimum balance or setting up direct deposits.
• MMAs are usually FDIC- or NCUA-insured.
An MMA can be a good option for those who want interest and some level of liquidity, yet don’t require frequent access to their funds.
6. Brokerage Accounts
A brokerage account is a type of investment account that allows you to buy and sell investments like stocks, bonds, exchange-traded funds (EFTs), and mutual funds.
Key features:
• Brokerage accounts provide access to a wide range of investment options, allowing for diversification based on your financial goals and risk tolerance.
• Unlike retirement accounts, which often have rules about contributions and withdrawals, you can typically contribute as much as you want to a brokerage account and withdraw funds whenever you need them without penalty.
• While there is potential for growth in a brokerage account, it also involves market risk. The value of your investments can fluctuate, and you could potentially lose some or all of your invested principal.
• Fees vary; full-service brokerages may charge higher fees for personal support, while DIY or automated platforms offer lower-cost options.
The flexibility of accessing your money without penalties makes a brokerage account worth considering for medium- to long-term financial goals, like a down payment on a home, a car purchase, or a wedding.
7. Retirement Accounts
Retirement accounts, such as individual retirement accounts (IRAs) and 401(k)s, are designed to help individuals save for retirement in a tax-advantaged way.
Key features:
• The primary draw of retirement accounts is their tax benefits. Depending on the specific type of account, these benefits can include tax-deferred growth or tax-free withdrawals.
• There are limits on how much you can contribute to retirement accounts that are set annually by the IRS and can vary depending on the type of plan and your age.
• 401(k) plans are offered by many employers, sometimes with matching contributions, which is effectively free money toward retirement.
• IRAs (traditional or ROTH) are available to eligible individuals and may offer tax deductions or tax-free growth depending on the type.
• Contributions are typically locked in until retirement age, early withdrawals may result in penalties and taxes.
Retirement planning involves a number of factors, including:
• Age and desired retirement date
• Contribution limits
• Expected return
• Risk tolerance
Consulting with a financial advisor can help determine the best retirement account for your situation.
Finding Accounts That Work for You
Different types of bank accounts serve different roles in a well-rounded financial strategy. It’s common — and often wise — to maintain a combination of accounts to support everyday spending, short-term savings, and long-term investing.
For example you might choose to have:
• A checking account for bills and everyday spending
• A savings or money market account for an emergency fund
• A brokerage account for investing and building wealth
• A retirement account for long-term financial security
When selecting where to open these accounts, consider factors like interest rates, fees, accessibility, customer service, and mobile tools.
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The Takeaway
Understanding the main types of bank accounts can help you create a strong foundation for your financial future. Checking accounts are designed for everyday money management, while savings accounts are primarily for storing money for short-term goals while earning interest. Accounts like CDs, brokerage accounts, and retirement plans can support longer-term strategies.
By choosing the right combination of accounts and using them strategically, you can simplify money management, earn more on your deposits, and move confidently towards your financial goals.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What are the most common types of bank accounts?
The most common types of bank accounts include checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). Checking accounts are ideal for daily transactions like paying bills or making purchases. Savings accounts earn interest and are a good place to store funds for emergencies and short-term goals. Money market accounts combine features of checking and savings, often with higher interest rates. CDs lock in your money for a fixed term with a guaranteed return. Each serves different financial needs and goals.
What are the two most common types of bank accounts?
Two of the most common types of bank accounts are checking and savings. A checking account is designed for frequent use, offering easy access to your money through debit cards, checks, and online banking. A savings account, on the other hand, is intended for storing money and earning interest over time. It can help you build an emergency fund or save for specific goals while keeping your money accessible but separate from daily spending.
What is the best kind of bank account to open?
The best kind of bank account to open depends on your financial goals. If you need easy access to your money for daily expenses, a checking account can be ideal. For saving money and earning interest, a savings account can be a good choice. If you want higher interest rates and can meet balance requirements, consider a money market account. For longer-term savings with a fixed return, a certificate of deposit (CD) can be a smart option. Many people benefit from having both checking and savings accounts.
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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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