Banks and credit unions are financial institutions that offer financial services and 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. 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 three main types of bank accounts offered by banks or credit unions are:
- Checking Accounts
The most basic form of a bank account is a checking account. Checking accounts come with a debit card, checks, and are a good choice for day-to-day expenses.
- Savings Accounts
Savings accounts earn interest on your deposited money. By maintaining a separate account for savings, you can set aside funds for emergencies or short-term financial goals like a vacation.
- Certificates of Deposit (CDs)
With a Certificate of Deposit (CD), you commit to keeping your deposit with the bank for a set period of time (term). The bank or credit union will pay you interest. If you need to withdraw money before that time is up, you'll incur a penalty fee.
Questions to Ask When Choosing a Bank Account
Here are some questions that you might ask before choosing a bank account.
- Are there monthly or service fees, and can you afford them?
- Is there a minimum balance requirement?
- Does the bank or credit union offer easy access to your cash through their ATM network?
- Verify whether the account has FDIC or NCUA insurance for added security.
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.
Answers to frequently asked questions about banks.