With the wealth of bank accounts available on the competitive financial marketplace, deciding which ones will suit you best can be tricky. A current account should make managing your money easy, a savings account should help you build your nest egg and investment accounts should help you get the best return on your funds.

Use the following guide to clarify your financial needs and match them with the right type of bank account.

Current Accounts

A current account is the first crucial step in managing your money effectively. It will allow you to perform the crucial banking functions such as depositing your salary, paying bills and generally shopping for what you want. You will also receive a debit card for convenient cash withdrawals at ATM machines or for payments online and at High Street stores. While cheque facilities are increasingly being phased out these days, if this is important to you make sure the bank of your choice includes them. You might also want to look at package accounts to see if they suit your needs – while you will pay a small fee for this type of current account, it will include other services such as Breakdown Cover and Travel Insurance.

Savings Accounts

In addition to a current account, it’s advisable to have a separate savings account to effectively grow your money. One of the benefits of this is that a savings account will provide better return on your accrued funds. It will also have a lower minimum balance requirement if that’s the kind of bank account you opt for. Be aware though that savings accounts offer a slightly lower interest rate than other account options.

Money Market Accounts

Put simply, a money market account is another type of savings account and it delivers a higher interest rate. This type of account also has a higher minimum balance but it offers a great solution for when emergency funds are needed – a simple telephone call will allow you to establish, change or end a deposit. It also offers flexibility in that the term of a money market deposit can be chosen from one day to approximately a year.

Certificate of Deposit

Certificates of Deposits, or CDs, are also very similar to savings accounts, because they provide insured and guaranteed funds. This type of account entails you locking your money in for the length of the CD term – this means your interest rate may stay low even when interest rates are actually on the rise, but the advantage is that the interest rate is usually significantly higher than a normal savings account. A CD is a great choice when saving for something specific.

Cash Reserve Account or Overdraft Protection

A cash reserve account will protect you from getting overdrawn on your current account. One overdraft protection option is to attach a line of credit to your account. Another form is to have your savings account connected as your overdraft account so that money will automatically be transferred over when funds run dry. Be aware that banks can charge high penalty fees for going into overdraft, so the latter option is the safest.

Conclusion

From choosing the right current account to deciding on how best to build on your savings, there is a wealth of bank accounts available on the marketplace. The most important steps to take in order to make sure you find the perfect financial solutions are to thoroughly research and compare what’s available, while matching the offers to your individual needs.

Sean Raston is an economics student and expert in personal bank accounts.