Using financial services

Using financial services

Banks are financial institutions that play an important role in helping people manage their money. Banks bring together those who want to borrow and those who want to deposit money and offer a safe and convenient way to keep track of your spending and start saving.
  • Everyone in the economy can bank. Affordable CHECKING and SAVINGS accounts make entry into the “banking world” easy for young adults and others in the society who were formerly unbanked.
  • Many banks offer a basic account with a minimum or no monthly maintenance fee and no minimum balance requirement. Most banks offer free student accounts. It’s important to shop around for the lowest cost of banking.

Choose bank accounts that will minimize your costs and maximize your savings

Banking financial services

Banks are supervised and regulated by the state and federal governments.
  • Deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC), so your money is safe.

Checking accounts typically come with a CHECKBOOK , DEBIT CARD , and MOBILE BANKING OPTIONS and are meant for frequent transactions, i.e. withdrawing cash, paying bills, debit card charges and depositing checks.

  • Banks provide a way to keep records of all your transactions.
  • Banks provide a way to earn INTEREST on money by opening a savings account or a CERTIFICATE OF DEPOSIT (CD).
  • Banks encourage DIRECT DEPOSIT of your paycheck and other payments, allowing you to access your money immediately.
  • Having a bank account will help you ESTABLISH CREDIT
Credit Unions are nonprofit financial institutions that are alternatives to banks that usually serve their own members (e.g., a group with the same employer, club, union, or other affiliation).
Many people opt to open accounts with an ONLINE BANK and avoid traditional banks altogether.
People who choose not to use banks often use CHECK CASHING BUSINESS where fees for services add up.

Tips for choosing the right bank for you

Remember that banks are businesses and consumers must act as shoppers by finding a bank that best fits their needs.
Type of feeWhat they chargeHow to avoid it
Fees for maintaining checking or savings accounts$5 to $25 dollars per month Note: each bank will have different requirements depending on the type of account you openMeet requirements such as linking checking and savings accounts, paying bills online, direct deposit or maintaining a minimum balance
Using ATMs that aren't affiliated with your bankFor each transaction as much as $4 dollars to the ATM provider and $4 dollars to your bankMany banks offer apps that tell you where to find a free ATM — or you could withdraw cash in advance when you're near your bank's ATM
Insufficient funds in your account to cover a purchaseAbout $35 dollarsTry low-balance alerts to prevent over-drafting
Excess transaactions$3 to $25 dollars per excess transactionAfter a certain number your bank may charge you so never use your savings account for everyday transactions, use your checking account

Things to look for in a bank

  • Location and convenience: number and location of ATMs in your area.
  • Account minimums: amount needed to open account and minimum required to maintain account, or else how you can avoid fees altogether.
  • Potential charges (see chart above).

Generally, to open a bank account you need

  • Photo ID.
  • Social security number.
  • Proof of address.
  • Money to deposit.
  • Be 18 years old to set up your own bank account, although your can have an account linked to an adult from age 14.

Choosing between a bank and a credit union involves some tradeoffs.
  • ProIf you are eligible to join a credit union, they generally provide better customer service. Credit unions also offer higher interest rates on deposits and lower rates on loans.
  • ConBanks often adopt new technology and tools more quickly. Broad ATM and branch networks are the norm for big banks; credit unions rely on large, cooperative networks of ATMs and shared branches.
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