Interest-free checking accounts, such as basic, student, senior, and joint accounts, have low maintenance requirements and may come with restrictions such as maintaining a minimum balance or limited check writing. They are useful for low-income customers and those new to banking, but it’s recommended to also have a savings account or other low-risk options for idle cash.
Accounts that do not earn interest are usually checking accounts with low maintenance requirements. Some of the most common types are basic, student, senior, and joint accounts. A couple of these types are interest-only, while others may earn interest in some cases, depending on the terms.
One of the most popular interest-free accounts is the basic checking account. Usually this is used by a person who wants to have the account for transaction purposes only. While the terms for these accounts vary widely, they are mostly low-cost and tend to come with some restrictions. Some requirements may include maintaining a minimum balance, paying a monthly fee, or writing a limited number of checks per month before a fee is charged.
Student and senior checking accounts are other widely used interest-free accounts. These tend to have lower or no fees on things like checks, ATM use, and teller service. This type of account may also offer low credit card rates and traveler’s checks.
There are also special low-cost interest-free accounts for low-income customers. Some regional governments require banks to offer these accounts on terms determined by the government. They don’t require a minimum balance and tend to have very low or no monthly fees. While the checks may be free, there is usually a limit to how many can be issued per month without a fee.
Some accounts that do not earn interest are used primarily through computers, phones, and ATMs. Although this can be a convenient and easily accessible type of account, there may be a fee for using the ATM. This is usually a good option for customers who rarely need to go to a physical bank for banking.
While they may offer interest, there are also interest-free accounts for joint clients. They generally offer many of the same services as a basic checking account. They tend to be less common for joint holders.
Non-interest bearing accounts are often a good option for people who are new to banking, such as children. They have enough services to help a new customer get used to the banking process without being too demanding. These types can also be particularly useful for customers who are low on cash or who tend to carry a low balance. Some accounts are even completely free.
Although interest-free accounts can be a simple and inexpensive option, it’s generally wise not to keep too much money in them. Customers who have cash sitting idle from month to month will generally benefit from having at least one savings account. Other low-risk options include money markets and certificates of deposit.
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