Banking fundamentals: How and where to start Banking
is part of your daily life, and every time you pay with a credit card or send money to a friend, your bank account may be involved. Banks and credit unions also play an important role in important life events (like buying a house or financing other goals).
Knowing how your account works will help you take advantage of these services while avoiding costly mistakes.
What can you do?
Banking services cover everything from savings accounts to loans (and more). Some of the most useful features are described below.
You can spend your life without a bank or credit union, but if you use free or low-cost banking services, you are likely to save time and money.
Decide what banking services are most important to you and if you are willing to pay for them. Saving money: banks provide a safe place to store funds. You can keep your money in the bank and take it when you need it, instead of hiding it under a mattress or taking it with you. You can never (or rarely) have been exposed to cash-you can pay by electronic means.
The funds of the FDIC Insurance Bank are protected by the United States government (credit unions are just as safe), so if a bank goes out of business, your insurance money will not evaporate. Payment and transfer: your money should be easy to use.
A checking account allows you to use your money in the Bank to check your ticket, and there are several ways to make an electronic payment:
Pay with a debit card at a retailer or online merchant.
If your bank offers online payment functions (most of which are free) and allows your bank to send money to service providers, utility companies and other companies, you can pay your bills online.
Provide your account information to toll collection agents so they can withdraw funds from your account. Use online applications and services to send money to friends and businesses you buy.
Your bank does not necessarily offer these services, but they will use your bank account to finance them.
Connect the money to someone (or yourself) for an important transaction.
When you can not use personal checks and electronic payments, you can also pay with a cashier’s note and a payment order. Earn interest: some bank accounts help you increase your savings by paying interest. For a long time, compound interest will convert your original savings into a greater amount of money. However, banks are a safe place to store funds, so they should not pay the high interest rates that you can get from other investments.
Banks and credit unions are better suited to your emergency fund and the money you plan to spend in a few years. Borrowed money: banks in the loan business. They offer car loans, home loans, credit cards and home lines of credit. Traditionally, that’s what banks do (absorb customer deposits and then use that money to lend), but banks get revenue from other sources and competition is evolving.
Now, you have additional loan options, including non-bank loans or personal loans to individuals.
Where to open an account The term “bank” is often widely used. In fact, there are several different types of banks, and the bank you choose will affect your experience.
Credit unions and local banks are usually the best option for your first account. Online banking can make you make more money without the need for additional costs, but if you have a lot of money in the bank, the benefits are greater.
If you still have unmet needs, or if you want a single stop shopping, a large bank can be useful. The big banks can be the first thing you think about, because they are actively advertised, and they have many branches of location. These banks are familiar names and offer a full range of products and services. They have a global presence, many ATMs to choose from, and customer service is usually all kinds of weather. However, you can only be one of the millions of customers, and working with large banks can be frustrating.
You can make a free deposit at a large bank, but in general, you must qualify for an exemption from fees to enjoy a free check. Regional and community banks generally focus on smaller geographic areas.
They can serve clients in several states, or they can serve only one or two cities. There is no doubt that they are more involved in community activities to help people and businesses operate locally-they can be an important part of the local economy.
Because these banks are more closely linked to large banks, large banks are more likely to offer free checking and loan accounts, and usually offer the same products and services (although sometimes services may be limited). Credit cooperatives are very similar to regional and community banks. But they have a different name because they have different ownership structures: they are non-profit organizations owned by clients (as opposed to those owned by investors). In other words, when you open an account and deposit money, you become part of the owner. Especially in small credit unions, you may be more likely to get loan approvals-in fact, employees can review your application and be willing to look at past projects, possibly an agreement spoiler for a large bank.
However, you still need enough credit and income scores to qualify. Online banking operates completely online, so they are more suitable for knowledgeable consumers of technology. Online banking is generally free, and these banks tend to pay higher interest rates than physical banks for savings accounts (or even checks). However, it may still be worth opening an account with a bank or credit union that has a physical store nearby.
These branches can quickly access payments and provide additional services.
Types of accounts A savings account is the most basic type of bank account: you deposit money in a bank, the bank pays a little interest, you can withdraw cash as needed or transfer the funds to another account. However, a savings account is not of great use for everyday expenses, since it limits the frequency with which you withdraw money.
Fortunately, the checking account satisfies this need. Checking accounts make it easy for you to spend money.
To do this, you can:
Enter your card number online
Pay your bills online
Authorize the person issuing the bill to withdraw the money owed from your checking account. Usually, these accounts do not pay interest, but you may not need to keep a large balance on the check. That is, some high-yield, high-yield checking accounts pay more than basic savings accounts.
Using a checking account is quite simple: most people deposit their salaries in a checking account and then use that money to pay the expenses or transfer money to other accounts. Money market accounts are a mix of savings accounts and checking accounts. They pay interest-usually more than savings accounts-but it’s easy to spend your money using a debit or check. The only problem is that banks limit the amount you can pay from your account (usually 3 times a month).
These are good reasons for emergency saving or non-recurring expense. A certificate of deposit (CDs) is another option higher than the interest in a savings account. CDs, also known as term deposits, require you to promise not to use the funds for a certain period of time. In return, the bank will pay you more money-but if you cash in early, you will have to pay a fine. The duration ranges from 6 months to 5 years, and the longest term usually
How to open an account Opening a bank account
is just a matter of providing information and deposits. You can complete the process completely online, but some banks ask you to fill out the form.
You may even prefer to go to a bank branch in person, but this may not be necessary (or inconvenient). Choose a bank that can meet your needs at a lower cost (see below).
Once you have decided where to save, it is time to fill out the application form.
Provide information about you, including:
Personal information, such as name, date of birth, social security number or similar information
Identification card, such as driver’s license, passport or other identification card issued by the government (if you open an account online, you must provide an identification number)
Address information (if you use a postal mail box or a similar mailbox, you still need to provide your actual address) Banks are required to obtain the above information. They can request more details, such as their income, employment status, etc. If you are not willing to provide this information, you do not have to provide it, but you may need to find another bank. The biggest exception is when you apply for a loan: almost everyone will ask about your income before approving the loan.
If you do not investigate your credit or income, you can get a very expensive loan. Provide an initial deposit for your account. If you open an account in person, you can bring cash or write a check for your new account. You can also connect your existing bank account to your new account and then transfer the money electronically.
For future additions, you can set up direct deposits with your employer, and most banks allow you to use your phone to take pictures to keep checks.
Building a long-term relationship Transfer is a painful thing to do, so choose carefully. With the correct account, you will hardly notice your bank (which is a good thing).
With the wrong account, you will experience constant setbacks and spend more than you need. Getting a good interest rate means that you have a high interest rate on your savings and a low interest rate on your loans. You do not need the best interest rates, but as the number of dollars increases, interest rates become more and more important.
When you borrow, bad interest rates are also a problem: If you pay 20% interest with a credit card, the problem is inevitable. Minimize costs: monthly service charges and low balance costs can cost hundreds of dollars a year, while other banks can offer the same services for free.
Especially when you’re barely living, take a closer look at the spending plan before opening an account. Find the right person: consider how you want to interact with your bank. Do you like to do everything on the Internet yourself? If so, online banking (or low-cost projects in physical banks) is a good option.
Do I need to visit my branch regularly? Find a bank that is convenient and according to your schedule (some banks are open on weekends and evenings). Select the function you want. Any bank or credit union can provide a savings account, a basic check and a debit card.
What additional features do you value? Some examples include: If you want to transfer money between several bank accounts (free of charge), understand the bank’s ACH transfer rules.
Some banks offer this service for free, but limit the number of accounts to which you can connect.
If you receive a check but do not like to go to the bank, make sure you have a mobile deposit (or ATM deposit).
If you frequently use ATMs to withdraw money, check the ATM network or get an account that can reimburse the ATM fee.
Bank problems If you can avoid big problems, you will become a satisfied customer.
Again, you do not need to get the best savings account rate in the world (because it will keep changing) -you just need a good bank account. Processing costs, processing costs, processing costs: the Bank is famous for taking money from your account. There are monthly maintenance charges, low balance fees, no activity fees, blank check fees and so on. Choose a lower cost bank and register your account so you can avoid the costs incurred as a result of your activities.
Set an alert for your account and use the correct type of overdraft protection if you need it. Availability of funds: the most difficult lesson to learn is the concept of available funds.