Written by

Brian McKay

Brian McKay

Co-Founder & Lead Data Architect

Expertise

• Automated Online Rate Data Aggregation
• Location-Based Rate Tables
• Bank & Credit Union Health Safety Ratings
• Finance Calculators

Brian is the Co-Founder of MonitorBankRates.com. For over 18 years, he has engineered proprietary systems that track rates from over 8,000 financial institutions.

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| Fact checked | Published June 4, 2013 | Updated September 28, 2026 | 6 min read

Types of Bank Accounts: Checking, Savings, Money Market and CDs Explained

The difference between bank account types comes down to access and yield: a checking account allows unlimited transactions and pays little or no interest, a savings or money market account pays interest (today's MonitorBankRates national averages are 1.97% APY for high yield savings, 0.81% for standard savings and 3.07% for money market accounts) with withdrawal limits set by the bank, and a CD locks a fixed rate, 2.94% APY on the average 12 month CD, in exchange for an early withdrawal penalty, while FDIC and NCUA insurance covers all four up to $250,000 per depositor, per institution, per ownership category, verified by MonitorBankRates as of October 13, 2026.

Checking accounts, savings accounts, money market accounts and certificates of deposit each serve a specific purpose and come with different rules, rates and federal protections. Knowing the distinctions tells you where to keep money you spend, where to keep money you are saving, and how to keep both protected and growing. This guide covers deposit insurance through the FDIC and NCUA, the practical differences between transaction and savings accounts, what happened to the Regulation D withdrawal limit, ATM fees, and why APY and inflation are the two numbers that matter most when evaluating any deposit account.

MonitorBankRates national averages as of October 13, 2026, computed from rates published by more than 8,000 banks and credit unions.

FDIC and NCUA Deposit Insurance

The most important thing to understand about any bank or credit union account is whether your deposits are federally insured. For banks, that protection comes from the Federal Deposit Insurance Corporation (FDIC). For credit unions, it comes from the National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund. Both programs provide the same level of protection and operate under similar rules.

Coverage applies up to $250,000 per depositor, per insured institution, per account ownership category. The ownership category distinction matters: individual accounts, joint accounts, retirement accounts and certain trust accounts are each treated separately. A married couple can protect $500,000 at a single bank by holding accounts in both individual and joint ownership categories.

Checking vs. Savings vs. Money Market vs. CD

The four common deposit account types serve distinct purposes. Understanding the differences tells you where to keep operating money versus longer term savings.

Checking accounts: transaction accounts

A checking account is designed for frequent use. It is a transaction account, meaning there is no limit on how many deposits or withdrawals you can make. Money flows in and out by debit card, check, electronic transfer or ATM. In exchange for that flexibility, checking accounts pay little or no interest. The function of a checking account is access, not growth.

Savings accounts: the rate bearing workhorse

A savings account is designed to hold money over time and earn interest on the balance. The trade-off for that interest is less transaction flexibility. Federal Regulation D historically limited savings and money market accounts to six convenient withdrawals a month (transfers, online payments and debit purchases). The Federal Reserve suspended that limit in April 2020, giving banks the option to allow more, but many institutions still enforce their own limits and some charge an excess withdrawal fee. Check the account agreement at your institution.

For savers comparing accounts, the best rates are consistently found at online banks and credit unions, which carry lower overhead than branch based banks and pass the savings to depositors as higher rates. Our savings account rate tables are updated every day.

ATM Fees and How to Minimize Them

ATM fees are one of the most avoidable banking expenses and one of the most commonly paid. Most banks charge nothing at ATMs inside their own network. The fees arise outside that network:

• Your bank's out of network fee: your own bank charges $2 to $3 for using a machine it does not own.
• The ATM operator's surcharge: the machine's owner charges a separate $2 to $4, shown on screen before you confirm.
• Combined cost: a single out of network withdrawal can cost $4 to $7 in fees.

The reliable ways to avoid them are to use only in network ATMs, choose a bank or credit union with a large network or a fee reimbursement policy, and take cash back at the register when making purchases, which most retailers offer at no charge.

Interest Rate vs. APY: Why the Difference Matters

When banks advertise deposit rates you will see two figures: the interest rate (also called the nominal rate) and the annual percentage yield (APY). They are not the same thing, and the difference matters when comparing accounts.

The interest rate is the base rate applied to your balance before compounding. The APY is the total effective annual return including the compounding of interest credited during the year. Because credited interest begins earning interest itself, the APY is always equal to or greater than the stated rate. How often interest compounds decides the size of the gap:

• Daily compounding: interest is calculated and added every day. This produces the highest APY for a given rate and is common at online banks.
• Monthly compounding: interest is credited once a month, for a slightly lower APY at the same stated rate.
• Annual compounding: interest is credited once a year, so the APY and the stated rate are equal.

Inflation: The Biggest Threat to Deposit Returns

The most overlooked risk for deposit account holders is not bank failure, which is what FDIC and NCUA insurance addresses, but inflation. Inflation erodes the purchasing power of money over time. When an account earns a rate below the inflation rate, you are earning a negative real return: the balance grows in dollars but buys less each year.

If inflation runs at 3% and a savings account pays 1% APY, purchasing power declines by about 2% a year. On a $10,000 balance that is roughly $200 in lost purchasing power annually even as the balance appears to grow by $100 in interest.

As of October 13, 2026, the MonitorBankRates national average is 1.97% APY on high yield savings accounts and 0.81% on standard savings accounts, with the average 12 month CD at 2.94%. The gap between the two savings figures is the real cost of leaving cash in a branch savings account. Measure whichever rate you actually earn against the current inflation rate, not against other banks.

Deposit accounts remain the right home for money that must stay safe and accessible. The discipline is refusing a rate far below inflation when better insured options exist in the same deposit universe: the highest available high yield savings rate for liquid money, and CDs with competitive rates, Treasury bills or I bonds for money not needed immediately.

Banks vs. Credit Unions

Banks and credit unions both offer federally insured deposit accounts, but they operate under different ownership structures. Banks are for-profit companies owned by shareholders. Credit unions are not-for-profit cooperatives owned by their members, who are the depositors themselves.

That structure has practical consequences. Credit unions typically pay more on deposits, charge lower fees and offer better loan rates than comparable banks. The trade-off is membership, usually based on employer, location or an association, though eligibility has widened and most people can now qualify somewhere. Our credit union savings rate tables and savings account comparisons include both banks and credit unions.

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