Guide to Transaction Accounts
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What Is a Transaction Account?
Transaction Account Examples
Demand-deposit accounts. Demand-deposit accounts allow you access to your money without notice. They do not have maturity periods, can earn interest in some cases, and do not limit the number of withdrawals you can make. Checking accounts fall under this category. NOW accounts. A Negotiable Order of Withdrawal (NOW) account is a demand-deposit account that generates interest, similar to an interest-bearing checking account. Automatic transfer service accounts. An automatic transfer service account is a banking service that automatically transfers money between a person’s accounts. Credit union share draft accounts. Credit union share draft accounts are used when you’re part owner of a credit union.
What Is a Non-Transaction Account?
Non-Transaction Account Examples
CDs. A CD, or certificate of deposit, is a savings tool where you can earn interest on a specific amount of money for a specific period of time. The catch, however, is that you can’t withdraw that money during the designated time period. If you do, you will face penalty fees. Bonds. A bond is a type of loan you make to either a government entity or a company for a specific period of time. The party you loan the funds to agrees to pay back the entire sum, plus interest, for as long as they use your money. IRAs. An IRA is an individual retirement account where you save money for retirement, along with potentially growing your money through investments and oftentimes getting tax breaks. Money market accounts. Money market accounts are FDIC-insured deposit accounts that typically pay out higher interest rates than your average savings account. Some of them can restrict the number of withdrawals each month, so make sure to take that into consideration before opening one.
Differences Between Transaction and Non-Transaction Accounts
Frequently Asked Questions
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