Quit stuffing your cash under your mattress! It's time to learn how to bank!
Benefits of checking account and savings:
Checking account: At some point, you're gonna need to write checks. A checking account is good news if you’re paying regular bills like car insurance, rent, credit card payments, etc.
You get easy access to $ through checks, debit card, cash from an ATM, and the security of having your $ in a bank.
Savings account- This pays you interest, meaning free money! A great way to save up your dollars.
Different types of checking accounts:
Basic checking- works best if you can keep only a small amount of $ in your account on a regular basis. Some banks have a monthly fee to have a free account. A paycheck may need to be deposited into account or you might have to keep a minimum balance. You’ll be charged if you go below the minimum balance.
Interest bearing- Pays interest on $ kept in the account. Higher minimum balance - usually around $1000.
Express- Best if your banking is done via ATM, telephone, or online. Fees are low, usually about $5-10/month and it has a low minimum balance. Make sure ATM’s are convenient for you though; will have to pay fees if the ATM is not from your bank.
No Frills- low minimum balance, no fees (or low fees). Only able to write limited # of checks/month.
Student account- Special checking deals. Low-monthly fees, free checks, no minimum balance, etc. Varies between banks.
The idea is to save $, so there fewer options. Keep an eye on the interest you can earn.
Basic savings account- Easy to open, quick access to $. Small amount of interest, insured by federal government up to $250,000.
Money market account- Minimum balance is usually more (about $1000-10k). Earns more interest, but only able to write a few checks per month. Account may not be insured.
Certificate of deposit- Money is tied up and unavailable for a set period of time in exchange for favorable interest rates. Range from 6 months to a few years. You receive the initial deposit plus the interest.
Determining your banking needs:
- Where is your bank located? Is there a branch or ATM near campus/where you live?
- Do you go to the bank to deposit/withdraw $ or would you rather use an ATM?
- How much $ will you be able to keep per month? Is there a minimum balance required?
- How many checks will you need to write each month? Does the bank have a limit to the number that can be written?
- Do you pay bills online or write paper checks?
*Consider your money habits- If an ATM card enables you to withdraw $20 at every ATM, you might want to consider doing something that allows you to not pay that cash.
Managing your checking account:
-Keep track of all ATM/debit card/credit card transactions.
-Write down all transactions.
-Don’t overdraw account- bank may change fee; can hurt your credit history, bank may notify other banks (may be refused banking services from other banks in the future)
- If you’ve written checks or submitted electronic payments that haven’t cleared yet, the balance on your ATM receipt will be more than what is available.
- Balance your checkbook and compare online to your personal notes.
- Report any suspicious activity to your bank immediately.
Account fee- monthly fee for simply having an account with the bank.
Online banking fee- if you do banking online, may be charged a convenience fee; this varies from bank to bank.
Minimum balance fee- if account falls below a certain balance (even for a day) this fee is applied
Balanced check fee- if you write a check for more money than in your account, check will “bounce” and the bank will charge a fee. Whoever you wrote the check to may charge a fee as well. Same fee applies for online bill payments.
Overdraft protection- allows check to clear when you bounce a payment. Also applies for online bill payments and debit card use.
Teller fee- some banks charge the user a fee for using a teller.
Account reconciliation fee- if your account doesn’t balance correctly with your records, bank can help you find the error for a small fee.
ATM card fee- some banks charge for providing the card.
ATM transaction fee- usually just for ATMs not owned by the bank.