Savings Accounts
This is usually the first kind of account a person has...  You put your money in and the bank gives you interest on your money.  (Be sure to check out The Math of Money to learn about how interest works.)  The interest rate is usually pretty low (like 1%), but it's better and safer than sticking the money under your mattress!  Your mattress doesn't pay ANY interest and the money can be stolen.  In a savings account, your money is safe.

Here are some things to watch out for when opening a saving account:

• Is there a minimum amount you need to have to start the account?
• Is there a "required minimum balance?"  This means that you have to always have a certain amount in the account, like $100.  With some banks, if you drop below that amount -- even by a penny for one minute, they'll charge you a fee!!  Ouch!
• Will you get charged for things like withdrawals (taking money out) or asking what your balance is?
• What's the interest rate and how often do they compound the interest?  (Remember, keep reading and you'll learn all about this stuff.)  Monthly?  Quarterly?  (That's every three months.)
• Can you get an ATM card with the account?  (We'll get to these.)

Checking Accounts
Really, when you think about it, checking accounts are pretty strange things...  You have your money in a bank (or credit union, etc.) and you just fill out a little piece of paper and hand it to someone and it's the same thing as taking money out of your account and giving it to them.  Amazing!

This is a pretty big topic, so the next lesson will be just about checking accounts.

Money Market Accounts
Money market accounts are just a twist on a standard bank savings account.  The twist is that the interest rate changes every week.  This is a good place to put your money though, if you still want to be able to get to it pretty quickly because they pay a higher interest rate than regular savings accounts.

The trick is that you usually have to have a fairly high minimum balance (sometimes $1000) and you can only make a few withdrawals and deposits each month.  (More on these in the Investing lessons.)

Certificates of Deposit
Here's how they work in a nutshell:

You put your money, say $1000, into a CD for a specific amount of time (6 months, 1 year, up to 3 years) and they'll give you a slightly higher interest rate than you'd get with money market account -- and a much higher interest rate than a regular savings account.  You are loaning the bank money at 3% so they can turn around and loan it to someone else at 9%. 

CD's are completely safe since they are done through banks that are FDIC (Federal Deposit Insurance Corporation) insured.

The only catch is that you can't take your money back out until the time is up -- unless you want to pay a stiff penalty.  So, you have to be able to completely live without that money during that time.  Of course, the longer the time commitment, the higher the interest rate will be...  But, the longer you'll have to be without your money.  Also, you'll have to pay state and federal income tax on the interest.

If you want to buy CD's, definitely do some research on the Internet for the best rate.  You'll probably be able to find a higher rate than what your local bank is offering.