A bank is a convenient and safe place to store your money. If you don’t already have a bank account, or are looking to shop around for a new one, be prepared to do your homework. You can find a lot of information about the various products and services offered by banks in your area on the Internet. Most banks offer a number of different types of accounts and packages that include perks –you can often find the best deals through promotions and limited-time offers. However, you should be wary of offers that seem too good to be true. Be sure to read the fine print – most banks have fees and restrictions. You should consider the following criteria when deciding where you want to park your money.
Checking Versus Savings
Traditionally, checking and savings accounts differed significantly. A checking account was used to pay bills, make day-to-day purchases, and of course, write checks. A savings account, on the other hand, was used for deposits. The money in a savings account earned interest. Today, these accounts can appear similar on many fronts. The following are some of the key differences:
Checking Account
- Objective: everyday purchases, monthly expenses
- Unlimited number of withdrawals, transactions, or checks per month; banks may charge a monthly “maintenance fee” for the account
- Low interest rates, if any
- Low minimum balance, if any
Savings Account
- Objective: saving money
- Limited number of withdrawals or transactions per month; banks may charge fees if limit is exceeded
- High interest rate
- High minimum balance
Other Services You May Need
In considering what other bank services you may need, think about your habits. If you frequently take out money from ATMs, it’s a good idea to make sure that the bank has a number of ATM locations that are convenient for you. Keep in mind that using another ATM will cost you every time you want to withdraw money. If your bank is also charging you a fee for taking out money, these costs can start to add up. In addition, remember that the more accounts you have with a particular bank, the more likely they’ll be to offer you a deal on other products and services, such as getting a credit card or taking out a mortgage.
Certificate of Deposits (CDs)
Interest accounts may yield you very little interest, especially when you take fees into consideration. Say, for instance, your bank requires you to pay $5 per month in fees. That amounts to $60 per year in total fees. However, if you’re only earning 2% interest on the same account, you’ll have to keep a minimum of $3,000 in your account in order to earn back what you pay in fees. If you really want to earn interest on your money, consider a certificate of deposit (CD). A CD usually has a higher interest rate; however, you will have to agree to not withdraw your money for a given period of time. Your interest rate will depend on how long you decide to hold the money, from a few months to five or more years and won’t change if interest rates fall.