Using a Bank
Banks and credit unions make managing your money easier and safer. For one thing, your accounts are insured by the FDIC or the NCUSIF, so what you deposit will be there when you need it, up to the insurance limit of $250,000.
Banks and credit unions offer several types of accounts under one roof. So you can use different ones to handle different financial needs.
- With a savings account, the interest that you earn on your account balance compounds, which means it's added to your existing savings. The next time interest is paid, it's paid on this new, larger balance, so you earn more.
- With a checking account, you can pay your bills either by paper check or electronic transfer via ACH, which is safer and faster than paying them in person. People who pay you have the same choices.
- You can set up an automatic bill pay system so your payments are made on time. You do need to have money in your account to pay or you'll probably be charged an overdraft fee.
- You can get an ATM card or debit card linked to your checking account and sometimes your savings account. The card lets you withdraw money or pay for purchases with money in your account. In fact, it's sometimes called a check card.
Banks and credit unions also offer credit cards and loans, and may charge their account holders slightly lower rates to borrow. The loan application process may also go quicker for existing customers.
When you choose a bank or credit union, look for one that offers the services you want at the most reasonable cost. Some offer special deals for students.