Basic Banking
By: Source: AARP.org Date Posted: 2005-03-20 12:08:22
Banks and other financial institutions can keep your money safe–and close at hand. Be sure to choose a bank that is financially stable, charges reasonable fees, and offers the services you need.
Safety and Convenience
Banks keep your money safe. They protect your savings from being lost, stolen, or destroyed by fire. If the Federal Deposit Insurance Corporation (FDIC) insures your bank, you won't lose your bank deposit if your bank goes out of business. You can tell if your bank is insured if it displays an FDIC sticker at each teller station. The National Credit Union Administration (NCUA), a U.S. Government agency, usually insures deposits you make in credit union accounts.
Banks are extremely convenient. You can put money in or take money out of a bank account any time you want, often at a moment's notice. Bank tellers accept deposits and give you cash during regular business hours. After hours, you can use a cash card to get money from the bank's Automated Teller Machine (ATM). You can shop with a debit card that automatically deducts the amount of your purchase directly from your bank account. You can withdraw money from a checking account by simply writing a check.
A Variety of Services
Banks and savings and loan associations usually offer checking and savings accounts, certificates of deposit, loans, credit cards, debit cards, investment services, and safe deposit boxes. Some even let you conduct your banking online through your home computer.
Credit unions are not-for-profit, member-owned cooperatives that serve people who have something in common, like working for the same employer. Most credit unions offer share draft (checking) accounts, share (savings) accounts, credit cards, and loans.
Questions to Ask
Be sure to ask these questions when deciding which type of account or banking relationship is right for you:
- Is the bank financially sound? Visit www.bankrate.com to find out how your bank's financial stability is rated. This web site rates banks using quarterly data from the FDIC, NCUA, and the Office of Thrift Supervision (OTS). OTS supervises savings and loan associations.
- Does the bank have the services you need? Make sure the bank has convenient branch locations and service hours. Be sure it offers all the services you'll need to conduct your banking affairs. For example, if you want to do your banking online, and the bank you're considering doesn't offer this service, you may want to look elsewhere.
- What fees, if any, does the bank charge? Banking isn't free. You may be charged a monthly service fee on your checking account that could include a charge for each check you write. In addition, you'll probably have to pay a fee to use your ATM card at another bank. Request a written list of bank fees, and compare fees at several banks. Be sure to monitor your fees every month when your account statement arrives. Fees change often!
For More Information
Buiding Financial Freedom
‘Making Sense of Savings’ is a booklet published by the federal Consumer Information Center. It provides solid information on banking basics.
URL: www.pueblo.gsa.gov/cic_text/money/finanfree/finanfree.htm
Savings Calculators
The American Savings Education Council and the Employee Benefit Research Institute have launched a ‘Choose to Save’ education campaign designed to help Americans plan for retirement. Visit the ‘Choose to Save’ web site for a list of financial calculators in 12 categories. The site's Savings Calculators help you figure out such questions as how much your savings will be worth in the future; what it will take to save for a new car, home, or a college education; and how taxes and inflation will affect your savings.
URL: www.choosetosave.org/calculators
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