Banks and credit unions are financial institutions that offer financial services to allow you to safely store money. Knowing the basics of banking and how to choose the right financial institution will help you achieve your financial goals.
Benefits of a Bank Account
If you do not currently have a bank account but have been thinking about opening one, here are some of the benefits you should consider:
- Your money is safe
Keeping cash in your home puts you at risk of theft, fire, flood, loss, or damage. Opening an account at an FDIC-insured bank or NCUA-insured credit union ensures that your money is protected in the event of a disaster up to $250,000. In addition, you are covered in the unlikely event of a bank or credit union failure. - No check cashing fees
Most bank or credit union accounts have no check cashing fees. This can save you money when depositing a check. - Online bill pay and account access
Most bank accounts offer online bill pay and online account access where you can review how much money you have and what charges have been made to your account. - You can transfer money to family and friends with ease
Person-to-person payments and mobile app payments are offered by most banks and credit unions.
Types of Bank Accounts
The main types of bank accounts offered by banks or credit unions are:
- Checking Accounts
Checking accounts are the most basic form of a bank account, designed for everyday transactions. They typically come with a debit card and checkbook, allowing you to pay bills, make purchases, withdraw cash, and transfer money. - Savings Accounts
Savings accounts are designed to help you save money and earn interest on your deposits. They are ideal for setting aside funds for emergencies, future purchases, or short-term goals. - Certificates of Deposit (CDs)
Certificates of Deposit (CDs) are time deposits where you commit to keeping your money in the account for a fixed term, ranging from a few months to several years. In return, you earn a higher interest rate compared to regular savings accounts. - Online Only Accounts
Online bank accounts are a type of bank account that operate primarily over the internet, eliminating the need for physical branches. They are a convenient option for individuals who prefer managing their finances from the comfort of their home or on the go. However, they may lack in-person customer service and immediate cash deposit options.
Choosing the Right Bank or Credit Union
When selecting a bank or credit union, consider the following factors to ensure it meets your needs:
- Reputation: Research customer reviews and ratings for the institution.
- Convenience: Look for nearby branches and ATMs, and check the availability of online banking services.
- Fees and Charges: Compare fees for account maintenance, overdrafts, and other services.
- Interest Rates: Check interest rates for savings accounts, checking accounts, and CDs.
Additional Resources
Bank on Washington
Helping individuals get set up with bank accounts.
Federal Deposit Insurance Corporation
About FDIC insurance.
National Credit Union Administration
About NCUA insurance for credit unions.
HelpWithMyBank.Gov
Answers to frequently asked questions about banks.