While keeping any cash you get in a box under a mattress or tucked away in your sock drawer might seem like a good way to keep it secure, there are better options out there. Bank accounts let you save money for a future financial goal or give you easy access to your money when you need to pay bills. If you’ve never set up an account before, or if it’s been awhile and you’d like to open a new account for a new financial goal, there are a few things you need to do first.
Choose the Type of Account
Bank accounts can be divided into two broad types: checking accounts and savings accounts. Savings accounts usually earn interest, if you have more than a certain amount of money deposited in them. Checking accounts usually don’t earn interest, but there are exceptions. In some cases, you need to have a very high balance in a checking account before you earn anything on it.
If you are setting aside money for a specific goal or creating an emergency fund, it makes more sense to open a savings account, so that you are earning at least a small return, depending on the interest rate. Opening a checking account makes sense if you hope to have regular access to your money, either by writing paper checks or by using a debit card connected to the account. It is possible to open a savings and checking account at the same bank, at the same time.
Look for Hidden Fees
Before you set up any type of account, make sure you understand any fees connected to it. Some banks have minimum deposit requirements, for example. If your balance dips below a certain amount, the bank might charge you a monthly fee. Other common fees include a charge to use an ATM that is not connected to your bank, a monthly maintenance fee and a fee if you deposit a check that bounces.
Also look out for overdraft protection on the account. With overdraft protection, your checks won’t bounce, and the bank will cover you if you spend more than what is in the account. The downside of that is you need to pay a fee when you overdraw. Some banks also charge fees for each day that your account stays overdrawn. Although it can seem like a helpful tool, it’s usually a good idea to opt out of overdraft protection and to keep a close eye on your account balance instead.
Gather Important Information
You’ll need to provide the bank with some personal information before it will let you open an account. Usually, banks ask you for your full name, address, date of birth, and your Social Security number. You’ll most likely have to provide proof of ID, such as a driver’s license. To get the account going, you’ll need some amount of money, either in the form of cash or a check written to yourself. The amount you need to open an account varies from bank to bank.
Other Things to Look For
One of the most important things to look for when choosing a savings or checking account is insurance from the Federal Deposit Insurance Corporation. If a bank is FDIC insured, the money you deposit with it is protected from loss, up to a certain amount.
You may also want to find out if the bank offers online banking and get a sense of where its branches are and when it’s open. You want a bank that’s convenient and that won’t charge you high fees.
If you need assistance getting started on your path to financial freedom, contact CESI Solutions, today!
Image Source: Pixabay
Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
CESI is NOT A LOAN COMPANY