I’m a banking expert: My preferred bank account type for every financial goal

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A recent MarketWatch banking survey found that respondents had an average checking account balance of $11,195.38 and that the most important feature of that account was low or no monthly fees. The survey also found that 52.5% of respondents had a savings account at a traditional bank, while 29.7% had it at an online bank and 16.6% had their savings at a credit union.

While most bank customers know that a checking account is ideal for their daily or fixed expenses, many may not be aware of other types of bank accounts. Depending on your financial goals and priorities, there are different bank accounts that may make sense for you.

If you’re new to bank accounts or want to get more out of your accounts, check out these popular account types for every financial goal.

Also read seven reasons why you shouldn’t keep more than $3,000 in a checking account.

Emergency fund: savings account

“A savings account with a market-leading interest rate is a great place to keep your emergency funds,” said Ben McLaughlin, banking expert and president of Raisin, an online savings platform. “Your money will work hard for you, yet remain easily accessible should you need it.”

Banking experts agree that you should keep your emergency fund in a savings account that will earn you interest while remaining liquid so you have access to your money as it grows.

If you want to maximize your returns, look into high-yield savings accounts, as they’ll earn even more, with interest rates around 5%. Since it’s recommended to have three to six months’ worth of living expenses set aside in your emergency fund, you want that sizable chunk of money to earn you interest instead of sitting around.

Building additional savings: Certificate of deposit

Once you’ve made sure you have enough money in your checking account to cover your bills and a sufficient amount in your emergency fund, you can look into a CD through your bank provider for additional savings.

“Those who have a harder time keeping their funds at bay and want to save money for the future can open a certificate of deposit (CD), which puts members’ funds in a portion that they can’t touch until maturity,” said Zachery Calkins, a relationship counselor and former bank president of Addition Financial Credit Union. “These tend to pay higher dividends and a bonus if you leave the funds there.”

“CDs are a great way to build your savings with extra funds that you don’t need access to during the term,” McLaughlin said. “You can use CDs to build your retirement or emergency fund account, or to add to savings for a big life event or purchase.”

If you have major purchases coming up in the next few years, you’ll want to make sure your money is growing at a reasonable pace to help you reach your goals faster. And a CD is a great option.

“If you’re saving for a vacation or a new car and already have a good nest egg that you can easily access, investing extra money in a market-leading CD can earn you guaranteed extra interest that will boost your savings. You can use the extra interest to fund a special trip or extra extras on your new car,” McLaughlin said.

While banking experts agree that a CD is the ideal bank account for building additional savings, there is a caveat. “There is a penalty for early withdrawals. This option is usually attractive to people who don’t need the money right away,” Calkins said.

Big savings goals with liquid funds: daily money account

“Money market accounts are also a great way to invest money and earn dividends just by leaving the money in the account,” Calkins said. “You can even use these savings accounts as additional overdraft protection to make sure you’re always covered in case something unexpected happens.”

You may want to consider money market accounts if you want access to your money while your wealth grows. While a CD typically offers higher interest rates, the funds in a money market account are more liquid. As always, you should consult a banking professional to determine which type of account is right for you and your financial situation.

Retirement Planning: 401(k)

When it comes to planning for your retirement and making sure you’re ready when the time is right, Calkins recommends a 401(k). “The reason for this is because these funds are automatically deducted from your paycheck each pay period to set some money aside for your retirement plan. Not to mention, many companies will match up to a certain percentage of your contributions to help you continue to build your retirement funds,” he said.

It’s no secret that many banking experts recommend that you open a 401(k) account and take advantage of all available plans. This account can help you grow your retirement nest egg so that you’re prepared when you retire from the workforce one day.