The first, and most important thing, is that FDIC insured banks are safe. If a bank is FDIC insured it will advertise it. This insurance prevents people with checkable deposits from losing their money due to any damaging events that could happen to the bank.

• For example, you have a checking account of $2,500 at #1 Local Bank & Trust. The bank just happens to be destroyed by a tornado. The FDIC will get you all of your money, that way you can then put it in another FDIC insured institution.
• Also, a bank may just completely lose all of its money through bad practices. You do not need to worry; the FDIC has got you covered.

You need to know that keeping your money in your residence is dangerous for YOU! If you keep a rolled up pile of money in your apartment, and Mr. Burglar decides to kick in your door when you are not home, he will take all of your cash. He will then, ironically, deposit that cash into an insured bank account for safe keeping. The point is that this could have been avoided by having the roll of cash held safely by the heavily regulated bank. Check out CashCourse for reasons to get a bank account.

 

This is another great feature of the banking industry; there are a lot of banks with a lot of different account choices. Here are some of the common account options at banks:

• Checking Account
  • Sometimes they come with a fee, like a $15.00 per year for use fee. I recommend shopping around. Free-checking is an option at some banks.
  • They usually do not earn interest, the ones that do will have a minimum account balance
    • Some checking accounts are called money market accounts. These accounts generally have a minimum balance, which will cost you a fee if you go below.
  • With most checking accounts you can get a debit card, this works like a check, but fast and more convenient.
  • Some banks will make you for this service; a common practice is that you will pay a small yearly fee along with paying for the card itself. The card does expire every few years, meaning that you need to get a new one.
• Savings Account
  • These accounts do generally gain interest.
  • Some of these accounts will have a minimum balance, if you fall below you may be charged a fee if you fall below it.

When you are looking for a bank it is important to assess your needs. How much money do you need to have deposited in a financial institution? Do you have excess money that you would like to gain interest on? These are questions that can influence your decision. If you do not have additional money, and just need it to pay bills and make purchases.  It is important to note that it is very important to shop for a bank and make an informed decision. Check out CashCourse on how to choose which bank account is right for you.

There may be some unfamiliar terms that are used when talking about banking or finance. It is important to understand these terms so that you can make the right decision when it comes to YOUR needs.

Interest – Interest can mean two different things depending on which side of the transaction you are on. If you borrowed money from a bank, say for a car, interest the amount of money you pay for using the banks money. If were to get a loan for $1,000 to buy a small item, you may end up spending $1,100 once you have made all your payments. That way it stays in the banks interest to lend you money. The other side of interest is when you make money. If you have a savings account you may earn monthly interest on it. You deposit $100 dollars today, and next month you have $101.

ATM or Automated Teller Machine – ATM's have become quite popular in the last decade. These machines will allow you to do basic functions to your bank accounts. Functions such as money withdrawal, transferring money between accounts, or some ATMs will even let you deposit checks into your accounts.

APR or Annual Percentage Rate – APR is how your interest rates will be stated for your loans and interest-gaining accounts. The important thing to know is that there are two kinds of APR, nominal and effective. Nominal is how the rate is usually stated and effective is the actual interest rate earned.

• For example, you choose to put $1,000 in an account that earns an APR of 12% (nominal). The bank tells you that your interest will be compounded monthly, which means you get a monthly interest rate. (Nominal APR divided by 12) This means that every month your account grows by 1%. The table below shows the effect of getting 1% a month. This shows that over the course of the year you actually made 12.683% on your money, this number is the effective APR.

 

For some more terms and definitions, check out this site.

 

Banks and credit unions are actually more alike than different. They both offer much of the same services and products. They both offer loans and checking accounts. The key difference comes from the fact that a bank is a for-profit institution. A credit union is a member-owned organization.

To use a credit union, you need to be a member. Each credit union will have its own criteria to become a member. Each member is part-owner of the institution. A credit union will have a Board of Directors, made up of volunteers and elected members, to make the major financial decisions of the union.

When you do open that checking account it is very important you know the proper way to write a check. There are some specific things that you need to do to not only to complete the purchase, but to also protect yourself. Fist the date of the check, top right corner, is important to get right. Just use that days date that you are writing the check. Next I would like you to take notice to the numerical amount that is written right below the date. (It is surrounded by the blue oval in the diagram on the next page.) It is very important to start this number is far left in the box as possible. This will prevent someone from being able to add digits to the amount you mean to spend. Also using a clear point (.) between the dollars and cents will help clearly state your intention.

The next section of the check is the written amount. (It is surrounded by the green rectangle in the diagram on the next page.) Same as before, you need to start writing as far left as you can on the line. You spell out the dollar amount, like one-hundred seventy-five, and then put the cents in a fraction out of 100 form. Directly after the cents amount is important to draw a wavy line all the way to where it says dollars. Doing so will prevent any "additions" that can be added to the check line.

The red heart in the diagram shows the next section of note. This is the memo line where the side information should be put. This is where you will write why you wrote the check. When using your check to pay bills the memo line is used a little differently. In that case, it is common for the company to want you to put your account number here. Not your bank number, but the number that is on your billing statements that the company uses to identify your account.

The last important section is the signature line. (Yellow triangle) This signature needs to stay consistent. When you open an account the institution will have you sign a card. When you dispute that your wrote a check, the first thing the bank will do is compare signatures. Having your own unique signature is an excellent way to prevent fraud.

 

REMEMBER!!

Once you have decided to open a bank account there are things you need to remember. Banking accounts require their owners to monitor them. To be responsible you should:

Keep track of all the times you spend money from your accounts,Track all deposits that you make into your accounts,Review your monthly statements to ensure that all the purchases made were done by you.

Doing this will help you make sure that no other individual has been using your money. Check out CashCourse for tips how to manage your checking account.

 

Banks are like any other business, they make money. Banks make money, by selling money...sounds weird. Banks sell financial products that usually add to the wealth of the customer. When an individual deposits money in a bank, it raises the amount of money that a bank can use. Here are the common ways that a bank makes money:

• Interest on Loans – When a household or business needs a large sum of money for major purchases. A family may want to take out a loan to buy a house. A business may take out a loan to make renovations to the building they operate in.
• Fees– Financial institution charge their customers for an abundance of reasons.
  • Checking fee – A fee for maintaining a checking account. Some institutions wave this fee if you keep a minimum balance.
  • ATM fee – Banks charge for people to get cash out of these machines. Most banks will not charge you for pulling money from an account that is deposited at that bank. (For example I have a checking account at 1st Bank and when I draw money from a 1st Bank ATM, the $2.50 fee was waived.)
  • Overdraft fee – A fee charged when an individual tries to spend more money than they have in their checking account. An average amount is around $25 for this fee.
  • Check out the Most Annoying Bank Fees and How to Avoid Them
• Credit Cards – Banks generally have their own credit cards. These credit cards will generally have tie-ins to your bank accounts. Some banks may reward you with a cash back or rebate rewards program.
• Certificate of Deposit – Think of it like a special savings account that earns a better interest rate. These accounts are generally time-sensitive, which means if you get a 3-month CD, you need to keep your money in it for 3-months. There is generally a fee for early withdrawal of money.

It is important to understand that all banks are a little different. If you are undecided on which bank is right for you doing a little research can go a long way. Most financial institutions have an internet presence which will allow you to do your homework on the products and services that the bank offers. You could also go in and pick up some pamphlets on the institution's offerings. Some banks offer online services that you may find appealing, check out CashCourse to learn about the benefits of online banking.