Money in the bank tickets refer to the cash value of deposit accounts held at financial institutions like banks or credit unions. The main types of deposit accounts that hold monetary value are checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). The amount of money in each account depends on the individual’s deposits, withdrawals, and any interest earned over time.
Checking Accounts
A checking account allows customers to deposit funds and withdraw or transfer money on demand. Checking accounts are very liquid, meaning the money can be readily accessed at any time. The monetary value in a checking account fluctuates daily based on the account holder’s transactions. For example, the balance may start at $1,000 on Monday morning. If the customer writes a check for $250 that day, the new balance is $750. If they deposit $100 cash on Tuesday, the balance rises back to $850.
Tracking Checking Account Balances
Banks provide easy ways for customers to track their checking account balances. Most offer online banking so account holders can log in 24/7 and view their up-to-date balance information. Banks also provide paper monthly statements listing all transactions and the ending balance for the statement period. Some banks offer text or email alerts to notify customers when their balance drops below a certain threshold.
Overdraft Protection
If account holders attempt to withdraw or spend more money than is available in their checking account, this will result in an overdraft. Banks usually charge hefty overdraft fees. To prevent this, many checking accounts come with overdraft protection in the form of a linked savings account or line of credit, which can automatically transfer funds to cover the overdrafts. The money in the bank for a checking account is whatever balance is shown, but customers need to be aware if they have overdraft protection or not.
Savings Accounts
Savings accounts are meant for storing money and building savings. Unlike checking accounts, they are not used for everyday spending. Savings accounts earn interest – typically a small percentage of the account balance. The money in a savings account grows gradually over time through compound interest. For example, a savings account could start with a $5,000 balance and earn 1% annual interest. After one year, it would gain $50 in interest, growing the balance to $5,050.
Withdrawals and Transfers
While not as liquid as checking accounts, savings accounts do allow withdrawals and transfers. However, federal regulations limit certain types of transactions to 6 per month in standard savings accounts. Common transfers include moving money to a linked checking account or using funds for bill payments. When money is withdrawn or transferred out, it decreases the monetary value in the account.
Balance Tracking
Like checking accounts, banks make it easy to monitor savings account balances. Customers can check balances 24/7 using online banking, mobile apps, or phone banking. Paper statements are also sent periodically listing the transactions and ending balance for the statement period. Banks may also provide text or email alerts about balances dropping below a preset level.
Money Market Accounts
Money market accounts function similar to savings accounts – they pay interest and have limited transactions. However, money market accounts tend to have higher minimum balance requirements and earn higher interest rates. The monetary value in a money market account consists of the current balance plus any accrued interest. Interest rates fluctuate over time based on overall market conditions.
Comparing Money Market Account Interest Rates
Here is an example comparing interest rates on money market accounts at three major banks:
Bank | Money Market Interest Rate |
---|---|
Chase | 0.01% APY |
Bank of America | 0.03% APY |
Wells Fargo | 0.05% APY |
As shown in the table, Wells Fargo currently offers the highest interest rate at 0.05% APY. This means a $10,000 balance would earn around $5 in interest after one year. The monetary value consists of the original $10,000 deposit plus the $5 in interest payments.
Federal Insurance Protection
Like other deposit accounts, money market accounts are insured by the FDIC for up to $250,000 per depositor, per bank. This federal insurance protects account holders from losing money if the bank fails.
Certificates of Deposit (CDs)
CDs are time-based deposit accounts that pay a fixed rate of interest for a set period of time. Common CD terms are 3 months, 6 months, 1 year, or 5 years. Once the CD account is opened, the account holder cannot access the money until the CD term expires without paying penalties. In exchange for locking up funds, CDs earn higher interest rates than savings or money market accounts. The monetary value consists of the original CD deposit amount plus interest that accrues over the term.
Interest Rates on CDs
Here is an example comparing interest rates on 1 year CDs at three major banks:
Bank | 1 Year CD Interest Rate |
---|---|
Chase | 0.05% APY |
Bank of America | 0.10% APY |
Wells Fargo | 0.20% APY |
In this example, Wells Fargo has the highest 1 year CD rate at 0.20% APY. A $5,000 CD deposit would earn about $10 in interest after the first year. The money in the bank for this CD would be the original $5,000 plus $10 in interest accrued.
FDIC Insurance Protection
CD accounts also come with FDIC insurance protection up to $250,000 per depositor, per bank. This protects against loss of funds if the bank issuing the CD fails.
Conclusion
The monetary value of different bank accounts depends on the type of account. Checking accounts fluctuate daily based on deposits, withdrawals, and transfers. Savings and money market accounts grow gradually through accrued interest. CDs pay a fixed rate for a set term and early withdrawals result in penalties. All deposit accounts are insured by the FDIC up to $250,000 per depositor, per bank. Banks provide easy online access and alerts to keep customers informed of their up-to-the-minute balance information.