In the modern world, it would be a struggle to live without a checking account's many benefits. Using cash for every expense sounds nice, but is a hassle in practice. Many young people get their first checking account to deposit the checks from their first job. It allows one to get a debit card which will let to make purchases. Cash can be withdrawn from your account if you insert your debit card into an ATM. Employers often require employees to use direct deposit as a way of payment. This saves paper and trips to the bank.
There are many ways to save money when opening an account too. An account also allows you to avoid the fee for cashing a check. It also eliminates the need for paying extra to set up a money order. Many are concerned about keeping their account and funds secure from criminals. As long as you follow a few best security practices, you will be quite secure against identity theft and fraud. You might also be glad to hear about how your deposits are insured by the government and your bank. With so many convenient features to offer, checking accounts are worth opening once you understand a few essentials.
The Basics – How Checking Accounts Work
Before you get an account, you should have an overview of what to keep in mind. These basic principles will make the process safe, straightforward and help save you money.
Be sure to choose an account with low service fees and a decent interest rate. For the last decade, rates have been very low. Therefore, you'll want to focus on finding an institution with low fees. Banks with less branches and overhead tend to charge less.
You’ll also want to be sure your deposit is insured. Nearly every bank is insured, but it never hurts to be safe. Call the Federal Deposit Insurance Corporation (FDIC) or check their online directory. You can look into a credit union by referring to the National Credit Union Association on the phone or online.
A few issues like security must be kept it in mind. Never allow someone to pressure you into writing them a check if you feel unsure. Also, you can use a complicated password with capitalized letters, numbers and random letters to make it hard for someone to hack your account online.
Check if your bank requires an account minimum. Otherwise you might end up being charged for having too little money in the account. The reason they do this is it costs them a certain amount of money for operating your account.
The Checklist - What you Need to Open An Account
Before you try to take a trip to open a checking account, make sure you bring a few important things:
- your social security card
- government issued ID card
- your current address
- money to deposit
Now that you’ve got the basics down, you’re ready to open a checking account. If you have any extra questions refer to this FAQ, or give your bank a call. They want to help you since it means they can get another account to do business with. No question you ask will seem foolish, they’ve likely heard it before and are glad to help you.
Questions and Answers:
Q: How Do I Know My Money Will Be Safe?
A: In the United States, each depositor of every bank is federally insured up to $250,000 dollars if the bank goes bankrupt. Check with the FDIC for banks. For a credit union, check their insurance status with the NCUA. Many institutions advertise being insured on their front doors and in their teller booths too.
Q: What Happens if a Check Bounces?
A: You will might be charged an overdraft fee up to $25. It depends on your standing with the bank and its policies.
Q: How do I Avoid fees?
A: It is recommended to keep a reserve fund of at least a few hundred dollars in your checking account. That way you avoid overdraft fees and any possible fees for violating your bank's account minimum policy.
Q: Can I Earn Interest?
A: Yes, but the rate you earn will depend on current interest rates. At this time, rates are very low.
Q: Will the Bank Let Me Set an Account up Online?
A: Yes, many banks do. Some are known as online banks and have no physical branches at all. You’ll just need to email or FAX in your personal info and fill a few forms.
Q: Are People Under 18 Allowed to Get One Too?
A: Most places allow minors to get a custodial account that they use it with a co-owner like a parent or guardian.
Q: What ATM’s Are in My Bank’s network?
A: Be sure to ask your bank representative when you are opening your account. Many credit union have agreements to service each others customers. Banks also offer "ATM locator" apps you can install on your smartphone.
Q: Do I Have to Deposit a Check in Person?
A: An increasing percentage of banks now have mobile apps that allow you to take a picture and send it into the bank.