Opening a new bank account is a major step in your life, and as
such it should not be taken lightly. Depending upon the use that
you have intended for the account, certain options might be very
beneficial to you while others might not be beneficial at all.

By taking a little time to consider exactly how you plan on
using the new account, you might find that the account that you
had in mind isn’t the best option available to you… or you
might confirm that the new account is exactly what you need.

Below is some additional information on some of the most common
types of bank accounts, so that you can take the time to compare
some of the advantages and disadvantages of each and decide
which type of account is best to meet your needs.

Chequeing

One of the more common types of accounts, chequeing accounts
allow you to write cheques or use a cheque card in place of
carrying cash. The amount of the purchase is deducted from the
balance of your account, and you are usually allowed quite a bit
of access to the account over the course of the month if not
unlimited access.

The main drawback of chequeing accounts is the fact that unless
you keep records of all of your transactions it can be quite
easy to become overdrawn which leads to fines and other fees.

Savings

Quite possibly the most common account type, savings accounts
are designed to assist you in saving money for the future. These
accounts usually offer decent interest rates and may have
several options available concerning accessibility to the
account… the number of withdrawals allowed each month is
severely limited, however.

Money Market

A money market account, sometimes referred to as an investment
account, uses the value of stock market investments to determine
the interest rate on the account. These accounts are most often
used to have a balance from which to make investments in the
market, though some banks also use them as a separate account
option as well.

The number of withdrawals allowed may vary from bank to bank,
especially depending upon the intended use of the account.

Certificate of Deposit

When you want to find the best interest rates and terms on
savings, you might want to look at getting a certificate of
deposit. These accounts are designed for savings over a period
of time… the term of the certificate is set when it is opened,
and it gains interest until that period has expired.

Fines and penalties often apply for early withdrawal, though
most certificates of deposit have a brief period each year that
allows for withdrawal without the penalties.

Credit Lines

Credit cards and lines of credit are also common types of
accounts, but unlike the other account types listed here they
are actually forms of loans. When you open a credit line or
receive a credit card, you are given a credit limit… this is
the total amount that you can borrow at any given time.

Any items or services purchased using a credit card or credit
line must be repaid with interest, though on-time payments are
reported as a positive report toward your credit score.

The main drawback of credit cards and credit lines is that it
can be easy to use them as an additional source of funds instead
of merely a loan, and this sort of use can quickly build up into
a significant debt.

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If you are an individual with poor credit you might think a mortgage is just out of your reach. There are many mortgage lenders today that specialize in writing bad credit mortgages making it much easier for people with poor credit to qualify. Here is what you need to know before shopping for a bad credit mortgage loan.

As little as ten years ago if you had bad credit it was nearly impossible to qualify for a mortgage. Since this time an entire industry has sprung up around poor credit mortgage lending; there are now lenders that specialize solely in writing bad credit mortgages. it is important to understand that because you have a poor credit rating you represent a much higher risk for lending. Because of this risk you will pay more for almost every aspect of your mortgage. It is important to shop around for the best bad credit mortgage to minimize these additional expenses.

One important aspect of this bad credit mortgage is that you must find a lender that does not include a prepayment penalty in the loan contact. A prepayment penalty is a fee the lender charges if the loan is refinanced or you sell your home before the penalty expires. Prepayment penalties can be quite expensive; many mortgage lenders charge as much as six months worth of interest on 85 percent of the original mortgage loan balance.

Your goal for this mortgage should be rebuilding your credit. After two to three years of on-time payments you will want to refinance the mortgage with a traditional mortgage lender. You do not want a prepayment penalty preventing you from refinancing this mortgage. To learn more about your options for securing a mortgage with poor credit and how to avoid common mistakes, register for a free mortgage guidebook using the links below.

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