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Everybody will have a slightly different financial situation, and everyone has different needs when it comes to managing money. Bank accounts are the most common way of managing finances. There are so many various banks and account types to choose from, knowing which option is right for you can become confusing.
Whether you want an account to help you save or an account for your everyday bills and utilities, there is a specific account type for you. This guide explains what a bank account is, why they are useful, and the various types of bank accounts that are available.
A bank account is used to manage your finances and is essentially a record which shows an ongoing series of cash deposits and withdrawals. This record will show the current bank account balance at any point in time. If a bank account is in a positive balance, then the bank is storing that money on behalf of the customer. If it has a negative balance, then the customer owes that money to the bank.
There are various types of bank account to choose from, and almost anyone can open a bank account of some form. Most banks just require a form of identity for a customer to open an account, such as a driving licence or passport. Money within a bank account can often be spent using a debit card and managed online, depending on the account type.
Before applying to open a bank account, make sure to check the requirements of your chosen bank and account type. Some bank accounts are available to anyone with a proof of identity, while others have specific requirements such as a minimum balance. Depending on the account type, banks may also require a credit check, and they may not accept those who have been made bankrupt.
Bank accounts are beneficial to almost everybody, not just those with a lot of savings or high income. They are an easy and straightforward way to manage finances, and a debit card makes spending faster and more convenient than always using cash. A debit card means purchases can be made online and in person, and online banking makes it easier to transfer funds to other accounts.
Choosing a bank account is also a safer way of storing and spending money compared with cash. Cash can be subject to theft or fire and has no protection, whereas most bank accounts insure against theft.
Another popular benefit of a bank account is the ability to apply for an overdraft, so money can be borrowed from the bank as and when it is needed. Banks also offer interest on money stored in a bank account, which is essentially making money for nothing. Interest rates vary greatly between banks and bank account types.
Having a bank account is a simple way of managing personal finances. Monthly statements can help you to understand where your money is being spent and can help you stay on track with a savings plan.
There are various types of bank accounts each designed to meet different needs. Each type of bank account is created for a specific reason and gives the right tools for both spending and saving. By choosing the right type of account, customers can better manage their money and minimise fees.
The most popular types of bank accounts are:
Every major bank or building society is likely to offer various different types of accounts, and they will all have different requirements and fees that you should be aware of. Be sure to compare all your options before deciding which account is right for you. Look out for interest rates, monthly fees and extra charges that could occur with each account.