Different Types of Accounts

Account Types Overview: The Different Types of Accounts Available

When it comes to managing your money, your bank account is the foundation on which everything else is built. It’s the ‘hub’ of your finances and without the right bank account, earning, spending, saving and managing your money becomes close to impossible. Luckily, there are a whole host of bank accounts out there, so you won’t be short of choice. In this guide, we have taken a look at the different types of bank accounts available.

Popular Bank Account Types 

There’s no such thing as a ‘one size fits all’ bank account, which is why it’s important to fully understand the account types that are available to you. Whether you’re a student or a business, a couple looking to save together or a freelancer, you’re likely to have very different banking needs.

Joint Accounts

A lot of people have joint bank accounts, and they are commonly used by couples, business partners and family members who want to combine their money. This type of account gives two people equal access to the same account, access to the money within that account and the ability to manage it in the same way. When you have a joint bank account, you can both deposit, take out and control the funds, and both of you have the same amount of control. It’s a good option for sharing bills, house expenses or saving for a common goal. Joint accounts also make it easier to see and manage shared money, helping couples who pool their money in one ‘family’ pot. 

A joint account eliminates the need for constant transfers between individual accounts. Instead of splitting bills and one person paying the other person back, everything can come out of the same account. For example, couples might use a joint account to save for a vacation, a home or other large purchases. Having a joint account encourages shared financial responsibility, as each account holder is equally accountable for how the money is used.

Savings Account

With a savings account, you have the security of keeping your money somewhere safe, whilst also earning interest. Instead of keeping excess money in a standard debit or current account, savings accounts provide somewhere to keep the money, minimising the chances of you accidentally spending it. Plus, most savings accounts pay interest on the money you deposit in them, adding to your savings pot. Usually, the money deposited in a savings account is protected up to a certain amount by schemes such as the FSCS.

You can easily access your money when it’s in a savings account, withdrawing or transferring money into other accounts, as and when you need to. Unlike investing in stocks or bonds, the money is fully free from market risks when it’s in a savings account, making it a low risk option for saving money.

Freelance Account 

A freelancers' account is designed for freelancers, contractors, sold traders, side hustlers and self employed workers. It differs from regular personal or business accounts, as it has specific features that fit the needs of freelance workers. The aim of a freelance bank account is to help freelancers to keep their personal and business money separate, making taxes and money tracking easier. These accounts often have tools to manage income and expenses, track cash flow and organise transactions. This makes it easier to keep an eye on the incoming and outgoing payments of a freelance business.

Using a dedicated freelance bank account can add a level of professionalism to your business, particularly when invoicing clients or applying for loans and credit. It’s a way to showcase that you’re serious about the work that you’re doing, whilst making the financial side of things easier for you to manage. There are a handful of freelance accounts to choose from, including one from Revolut.

Under 18’s Account

There has been a growing interest in under 18’s bank accounts in recent years, with many bank account providers such as Revolut, designing accounts with young people in mind. An under 18’s bank account, sometimes known as a youth or junior bank account, is made for children and teens under 18. These accounts are designed to fit the needs of young people, helping them become independent with money, whilst their parents can still oversee what they’re doing. 

Though under 18’s accounts are made for children, with easy tools to learn about cash, parents and guardians can run things. They can set limits, check payments, make deposits and move cash. This helps to teach good cash habits to children, and ensures their money stays safe in the meantime. Like other types of bank accounts, under 18’s accounts also have a bank card for kids to use - many of which have rules that can be set by parents - helping little ones learn to spend wisely.

Business Account

As the name suggests, a business bank account is for business dealings, and they’re not for personal use. Business accounts differ from private and personal accounts, but they can be used by businesses of all shapes and sizes. With a business account, it’s a lot easier to keep personal and company money separate. You can spend on the business account, knowing that it’s not going to impact your personal funds. This helps with cash flow, managing money and growing as a business.

Whereas a joint account can only be used by those named on the account, a business account can be used by a whole host of people. This includes employees, who can use it as and when they’re allowed to, for business expenses. This makes it easier to keep on top of the money that’s going in and out of the business, knowing what’s being spent and where. It’s also a great way to showcase the professionalism of the business, as only ‘serious’ business owners will have gone to the effort to set up a business account.

Student Account 

A student bank account has been specifically designed to cater to the financial needs of students, with a focus on university students. These accounts offer various features and benefits, all of which are tailored in a way that helps students manage their finances effectively while studying. For example, student bank accounts usually have low or no monthly fees, making them affordable for students who may have limited income. They also tend to come with interest-free or low-interest overdrafts, providing a safety net for students who might occasionally need to spend more than they have in their account.

A lot of student bank accounts come with perks, a way for banks to make their student account more enticing than the rest. Perks such as free travel insurance, train discount cards and cash incentives for opening an account are not uncommon.

Choosing the Right Bank Account for You

When it comes to dealing with your finances, the bank account you have is hugely important. All of the bank accounts listed above are available at Revolut, but you still need to narrow down your options, honing in on the right account type for your needs. You need to take the time to consider your options, and compare what each account can offer. It’s important to know what type of account you are looking for, and then compare various banks and financial institutions, all of which have something different to offer. If you are a student and you’re heading off to university, a student account is likely to have exactly what you’re looking for. If you are setting up a business and you want to manage your finances, a business account will likely tick every box. Consider things such as account maintenance fees, overdraft fees and interest rates, as these can add up in the long run.

You should also take a look at the various services offered alongside each account. If you like to bank on the go, digital services are going to be key, and you’ll need to make sure the bank has mobile banking options. If you are a keen traveller, then it’s a good idea to select an account that has minimal transaction fees abroad. It’s also a good idea to consider other customers’ reviews, as this information could point you in the direction of a particular account that other people are happy with. 

At IQ Money, we understand that the world of banking and bank accounts can be daunting. With so many different account types to choose from, it’s not always easy to know which is best for you. But, with a little bit of research - which we can provide, along with bank account overviews and guides - you’ll be able to find the perfect bank account for your financial needs.