There are two major types of bank accounts: checking accounts and savings accounts. A checking account should be used to write checks and perform routine banking activities. A savings account should be used to store the money you wish to save.
In addition to checking and savings accounts, there are also money market accounts. They combine the features of checking accounts and savings accounts into one. However, they may have higher minimum balance requirements.
Opening a bank account itself is a very simple process. However, many banks offer several types of checking and savings accounts, and figuring out what best suits your needs may be a time consuming task.
Bank hours vary between different banks and branches. Many banks are open from 9:00 AM to 5:00 PM Monday through Friday, except one day they may be open until 6:00 PM or 7:00 PM, and another they may just be open from 9:00 AM to 12:00 PM. Again, there is no standard. You should check with the respective bank you wish to visit. Simply look up online what their timings are.
Checking Accounts
Generally, a checking account does not accrue interest. However, some banks may give you interest if your balance is more than a certain minimum amount, such as $2,500 or $5,000. You can write checks using a checking account.
There is typically a monthly fee (such as $12, $15 etc.) for a checking account. However, some banks offer checking at no charge if you commit to a certain minimum balance such as $1,500.
If offered by your employer, you should enroll in direct deposit. When you enroll in direct deposit, your salary is automatically deposited in your bank account every time. You don’t have to wait to receive a physical check, go to the bank and deposit it, and wait for it to cash. Many banks provide several benefits, such as a free checking account, if you have direct deposit established.
Some banks may offer overdraft protection for a checking account. This may be in various forms. The easiest one is transferring money from a savings account when your checking account balance is too low to clear a check. Another type is where there is not enough money in any of your accounts but the bank gives you a “temporary loan” until your salary is deposited or you deposit money into your account. There will most likely be charges and interest on this type of overdraft protection. However, it can help you pay rent, utility bills, etc., if your salary is delayed for some unforeseen reason.
Savings Accounts
A savings account generally accrues interest, and there is usually a certain minimum balance you must maintain. The interest rate you get may depend upon the minimum balance required and the average balance you maintain.
Some banks allow you to link your checking account with your savings account by a facility called “overdraft protection.” This assures that if you write a check that exceeds the amount you have in your checking account, the bank will automatically transfer the appropriate amount of money from your savings account into your checking account. This will ensure that the check that would have otherwise bounced will clear. Some banks provide these services at no charge, while others may charge a fee, and other banks may not charge any money as long as you maintain a certain minimum balance. Even if there is no charge to have access to such a facility, most banks will charge money such as $10 or $25 or so, every time they needed to transfer money from your savings account to your checking account in order to make a payment.
There is usually a limit to the number of transactions you can perform with a savings account, such as six transactions per month. If you exceed the maximum number of transactions allowed, the bank will charge a fee for each transaction beyond the maximum, or worse, convert your savings account into a checking account.
Opening an Account
To open a bank account, you will need a social security number, your photo identification (such as a passport or a U.S. driver’s license) and an initial cash deposit, usually a minimum amount between $25 and $100.
Tips for Choosing a Bank Account
When choosing a bank and the type of bank account, you should also keep the following things in mind:
- Number of locations in your area, both for branches and for ATMs, as well as their business hours.
- Courtesy and customer service reputation.
- Consequences such as if your balance falls below the required minimum. Some banks will just stop paying interest and charge no other penalty. Most banks, though, will charge a monthly fee ($10 or $15) every month your balance falls below the minimum.
- Interest rate paid on the savings account. Also, find out whether the interest rate is fixed for a certain duration or whether it is only for the first few months and offered as a promotion. Usually, big banks pay lower interest while smaller banks tend to pay higher interest.
- Whether there is any fee for a checking account.
- Whether there is any fee for writing checks, or whether there is a maximum number of checks you can write per month. If you exceed the monthly maximum quota, how much will the bank charge per check?
- Whether the checkbook is provided at no charge.
- Whether it offers ATM access.
- Under what conditions will an ATM access fee be charged.
- Whether it provides phone banking, online banking, and online bill pay. If so, whether or not there are any charges for them. For phone banking, there may be a maximum number of times you can call the bank before you start incurring fees.
- Whether the cancelled checks are returned. If so, whether they are returned as original checks or whether you will be getting check images printed as part of the monthly bank statement. There may be a monthly fee to receive your original cancelled checks.
- Whether overdraft protection is offered. If so, what kind of charges will apply and under what circumstances.
Checkbook
When you open a checking account, the bank will provide you a starter checkbook that normally contains 5 or 10 checks. Each check will have your account number and a check number. However, it will not have your name and address. Many stores may not accept checks that have no name or address. However, you can still use them to pay your utility bills, etc.
You will have to order a checkbook. You can either order it from the bank or from an outside company. Depending on the account type, some banks may give you a plain checkbook at no charge and may charge you for a checkbook with fancy colors and pictures. In the U.S., it is not necessary to have a plain checkbook. You can choose from thousands of different varieties that may include all sorts of images, such as cartoons, animals, plants, people, places, flowers, or more. It is generally cheaper to order checkbooks from an outside company. If you do so, they will require one voided check from your initial checkbook. (To void a check, draw an “X” through the entirety of the check and write the word “VOID” in large letters). Checkbooks usually come in a bundle of 25 checks each and a box usually contains 4 checkbooks. You will generally order 1 or 2 boxes. These boxes will be sent to your mailing address.
Checks primarily come in two varieties: single or double. Double checks have a carbon copy of the check. Whenever you write a check, it will make carbon copy of your handwriting. This may be useful, as you can keep track of who you wrote checks to. Whether you order single or double checkbook, you will get a register with the checkbook where you can write the date, check number, payee name, and amount to keep track of the checks you wrote.
Most stores and other establishments that accept checks will do so only if you provide them with a valid U.S. driver’s license. Even though a photo ID of any kind should suffice, many cashiers are only trained to accept a driver’s license as a valid photo ID. If you run into that situation, it doesn’t help to argue. You should just come up with some other type of payment, if possible.
ATM/Debit Cards
ATM stands for Automatic Teller Machine. You can use an ATM to withdraw money from your account 24×7. You can also do other things at an ATM, like check your account balance, print a mini bank statement, and deposit checks into your account.
Most ATM cards also work as debit cards. They will have a MasterCard or Visa logo on them. As such, you can use your debit card as a “credit card.” In other words, whenever you use a debit card at a store, money is automatically deducted from your account. It is similar to writing a check. In order to use the debit card, you will require a PIN (Personal Identification Number), which is usually a 4-digit number the bank will mail to you separately. Keep this PIN very safe and never reveal it to anyone, not even to bank employees.
When you enter the PIN at the store, there will be a dial pad where you can punch it in discreetly. If you need to enter a PIN at the bank, there will be a smaller device with a dial pad. Remember, you will never have to verbally tell the PIN to anyone while performing any legitimate transaction.
Most banks have many ATMs spread out throughout the city and state and don’t charge fees as long as you use their machines. There may also be a limit to the number of ATM transactions you can perform per month.
However, if you use your ATM card to withdraw money from another bank’s ATM, the service providing bank will most likely charge around $1 to $3 per transaction. In addition to that, your bank may also charge $1 to $3 for that same transaction.
Most ATMs provide $20 bills, and you withdraw in multiples of $20. Some ATMs may allow you to withdraw as little as $10.
FDIC
The FDIC, or Federal Deposit Insurance Corporation, insures your money in the bank if the bank declares bankruptcy or cannot pay you back. Money in bank accounts and CDs are insured up to $250,000 per account, and $250,000 is insured for retirement accounts. Whenever you open any bank or retirement account, make sure the bank indicates that it is a “Member FDIC’ or “FDIC Insured.” If you have less than $250,000 in an FDIC insured bank account, you don’t have to worry about it. If you have more than $250,000, there are other ways to insure that money. You can open an account in your name alone, your wife’s name alone, in a joint name, in each of your children’s names with you as the account controller, in each of your children’s names with your spouse as the account controller, and so on. In other words, if you are married and have two children, you can keep $2,500,000 in one bank and still be completely FDIC insured.
It is important to know that stocks, mutual funds, life insurance, annuities, etc., are not insured by the FDIC, as these investments may lose value.
Major Banks
| Bank | Phone |
| Bank of America | (800) 932-2265 |
| Capital One | (800) 221-1212 |
| Chase | (800) 242-7324 |
| Citibank | (800) 446-5331 |
| DCU Federal Credit Union | (800) 328-8797 |
| Wells Fargo | (800) 956-4442 |
