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Basic Banking Guide


Written by Lauren Perez | Updated on 4/12/2019

Here at DepositAccounts, we understand that becoming proficient in money management doesn’t always come easily. If you already have a savings account, you may not realize that there are other savings options out there like money market accounts or CDs. You can also find new and better ways to save even more money, like opening an interest-earning checking account which can easily add to your monthly savings. Everyone — including our own experts! — has to start somewhere when learning a new skill, and learning how to maximize your savings is no small feat.

That’s why we’ve created our Basic Banking series. It’s designed to help those who are new to banking get their bearings. We’ll cover a variety of topics each week like how to write a check and where you can send money online. Each article will have a “Banking 101” tag added to the beginning of each title so that you can easily identify which articles belong to this series. We want to offer the starting knowledge that can help new savers save smarter, with the eventual goal of becoming like our regular readers who know the ins and outs of banking like the backs of their hands.

For those well-versed readers, this series offers you a chance to tell us about other elements you think might be crucial to banking successfully. Leave us a note in the comments and let us know what type of basic banking topics we should include in this series - we’d like to hear from you!

Articles in our Basic Banking series currently includes:

Banking 101: Cashier's Checks: When You Need One, How to Get One and How to Use One Safely

You’re ready to buy a home. Or maybe you want to purchase a car. Both of these transactions require a large sum of money. And often, you’ll have to make your payment with a cashier’s check instead of a traditional personal check. Read more


Banking 101: What You Need to Know About Wire Transfers

A wire transfer can be a great solution when you need to send money quickly. Also known as a bank transfer or credit transfer, this is a speedy way to electronically send funds through a bank, credit union or nonbank cash office. Read more


Banking 101: What You Need to Know About Private Banking

Private banking is a service or product package that some top banks provide for a select few. Unlike regular banking, which is widely available to the public, private banking is only available to the wealthy — often called “high-net-worth individuals” — making it inaccessible to the majority of Americans. At the most basic level, it’s a simple system. In exchange for entrusting a large sum of cash to the bank, the client is given access to an exclusive subset of financial products, services and perks. Read more


Banking 101: What Do You Need to Open a Bank Account?

Your financial situation is constantly changing (and storing cash under your mattress isn’t the best idea), so there’s a good chance you’ll need to open a new bank account at various times in your life. If it’s been a while since you’ve done it, or if you’re a first-timer, there are a few things you should know, beginning with the requirements to open an account. Read more


Banking 101: The Ultimate Guide to Understanding the Federal Reserve

Here's how important the Federal Reserve System is: Its actions could determine how much you pay in interest on your credit cards, how much interest the money you’ve stashed away in your savings accounts earns and how much you’ll pay when borrowing money to buy your next car. Yet, for however much the Fed affects our daily lives, many Americans aren’t clear on how this important financial institution operates. To help you, here is a comprehensive guide to what the Federal Reserve is, who runs it, what it does and how it affects your daily financial life. Read more


Banking 101: How Many Bank Accounts Should I Have?

Finances are extremely personal, which is why not everyone needs the same exact number of bank accounts. However, most people need at least one checking account and one savings account to conduct their financial business. Here’s a look at when you might consider more having more accounts. Read more


Banking 101: Overdraft Fees - What You Need to Know

If you’ve ever overdrawn your account, you’re probably familiar with the pain of being hit with a dreaded overdraft fee. This happens when your bank account falls below zero, subjecting you to an overdraft fee. When your account is overdrawn, your financial institution will continue to pay for purchases you make, essentially acting as a line of credit. Banks and credit unions charge overdraft fees for this service, which varies from institution to institution. Read more


Banking 101: How to Cancel a Check and How Much It'll Cost to Stop Payment

Even though it’s easy to make payments online, by phone or even your smart watch these days, sometimes you have to dust off your old checkbook. Since paying with a check is less of the norm, the ins and outs of using one are not as well known, including how to cancel a check you no longer want to send. Read more


Banking 101: 5 of the Best Options to Send Money Internationally

Every year, Americans send billions of dollars abroad — in 2016 alone, more than $138 billion was sent from the United States to the rest of the world, according to the Pew Research Center. If you’re travelling abroad and need cash sent from home quickly, or you want to send money internationally to a friend or loved one, an international wire transfer could be the best option. Read more


Banking 101: Where to Exchange Currency Without Paying Big Fees

Making the most of a trip abroad requires careful planning. You’ve got to consider the costs of transportation, accommodations, food, activities and incidentals. But there’s still one more thing to add to your budget: Exchanging currency. While you might not always be able to exchange currency without fees, there are some strategies you can use to reduce the cost of this important travel task. Here’s how. Read more


Banking 101: Where to Get Cheap Checks

With mobile payment services, like Venmo and PayPal, rising in popularity, it may seem like checks are obsolete. However, checks are still a common form of payment in the United States. In fact, checks accounted for $17.3 billion of non-cash payments made in 2015, according to the Federal Reserve. So what do you do when you run out of personal checks and need to order more? This article will walk you through all of your options when it comes to finding and ordering cheap checks. Read more


Banking 101: SIPC vs FDIC - Understanding the Difference

The Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) are two entities that insure banks and other financial institutions to protect their customers in case of a company’s failure. In planning your deposits and investments, you’ll want to know a bit about these options to ensure you’re getting the coverage you need. Read more


Banking 101: How Do Savings Bonds Work?

Savings bonds are low-risk savings products that pay interest for the time period in which you own them. The products, available for purchase from Treasury Direct, are part of a government program started by President Franklin D. Roosevelt in 1935. It allowed the Treasury Department to sell U.S. Savings Bonds as a type of security to the American public. Read more


Banking 101: How to Cash in Series EE Savings Bonds

Savings bonds are not terribly common anymore, so if you find yourself in this scenario, you may be unsure of what to do with yours. If you have a series EE savings bond and are trying to figure out how much they’re worth or how to redeem them, here’s what you need to know. Read more


Banking 101: What to Do When You’ve Lost a Money Order

Money orders are a handy way to pay for a product or service without either party needing to have a bank account. It’s practically the same as handing over dollar bills, but you have the comfort of knowing you have a receipt with tracking information and proof of payment should the money order ever go missing or be stolen. It can be tricky to get those funds back without one. Read more


Banking 101: Reasons to Use Bill Pay

It’s likely that you juggle a lot of bills each month: rent or mortgage, cable, phone, utilities, credit cards — the list goes on and on. Online bill pay is a service that many banks and credit unions offer to help customers pay their bills quickly and seamlessly — you can have money sent directly from your bank to those you owe with the click of a button. Read more


Banking 101: How to Cash in Savings Bonds From Your Childhood

Cleaning out old files is rarely someone’s idea of a fun time. However, it becomes a lot more exciting if you happen to stumble upon an old savings bond from childhood that you hardly remember. Forgetting about savings bonds is actually a good thing — it gives them time to mature and earn interest. Read more


Banking 101: Second Chance Banking - Savings and Checking Accounts That Won't Turn You Down

When you apply for a new savings or checking account, it’s common for the financial institution to check your history with a consumer reporting agency, such as ChexSystems. If the bank finds any negative reports, such as accounts that were closed due to unpaid balances or fees, or accounts with fraudulent activity, they may deny your application. Read more


Banking 101: How to Cash a Check Without Going to the Bank

With digital banking and peer-to-peer payment services on the rise, it can come as a surprise that people still pay each other using paper checks. For many, receiving a check may be an unusual experience, leading to the inevitable question: What to do with the thing? Read more


Banking 101: How to Find Your Check Routing Number

A routing number is a nine-digit number that is used as identification for banks and credit unions in the U.S. This digital address allows money to be processed and transferred from bank to bank. It also denotes the location where an account was opened. This number is also proof that the bank or credit union has an account with the Federal Reserve. Read more


Banking 101: What is the difference between APR and APY?

APR and APY can be confusing financial concepts, but knowing the difference between the two ways to calculate annual interest can help you make more informed decisions when saving and investing. Both APR and APY affect how much you earn or owe when applied to account balances. Read more


Banking 101: What is Regulation D and How Does It Affect Me?

If you’ve ever parked your money in a savings account, you may have learned the hard way that you can’t just withdraw money any time you want. Financial institutions, such as banks and credit unions, generally limit the number of times per month that you can easily pull money from your account. If you exceed your monthly withdrawal limit, your bank might charge you a fee — or it could even deny your transaction altogether. Read more


Banking 101: Is Mobile Banking Safe? Should You Avoid it?

As more and more banks enhance their mobile applications and customers increasingly bank online, there is growing scrutiny on the safety of these transactions. Many of us are asking the following questions: Is mobile banking safe? Is it better to stick to teller windows, paper checks and ATMs? Can we confidently use the digital resources that are making money management easier than ever? Read more


Banking 101: Everything You Need to Know About Money Orders

Money orders are like prepaid checks. You provide the funds upfront and fill out an order that, like a personal check, is endorsed to a specific recipient. Say you need to pay your utility bill, but the company doesn’t accept personal checks — and sending an envelope full of cash isn’t a safe option. Money orders are an alternative and secure form of payment to consider. Read more


Banking 101: Pay Off Debt or Save - How to Make the Right Choice

When you carry a substantial amount of debt but also need to grow your savings, it can be tough to figure out whether you should pay off debt or save money. Should you focus on shrinking your debt so that you pay as little interest as possible? Or, should you fund your savings so that you have enough liquid cash to deal with sudden expenses? Read more


Banking 101: Checking vs. Savings Account

Everyone needs a safe place to store their money, but deciding which type of bank account to open can be confusing. Should you open a checking account with a debit card that you can use for everyday purchases? Or is it better to consider a savings account, where you can build a rainy day fund? Read more


Banking 101: Where Can You Send Money Online?

Every once in a while, you need to send money online to someone — perhaps to your daughter for her broken-down car or to your friend who loaned you money for concert merchandise. There are many options available, and each one comes with its own format and fee schedule. Read more

Comments
kcfield
kcfield   |     |   Comment #1
One "essential" is finding a primary checking account (at a highly rated bank or credit union) that has no minimum balances or fees. In some instances, the financial institution may require direct deposit of one's paycheck for fees and minimum balances to be waived. In other instances, direct deposit is not a requirement for totally free checking. Another essential is finding a solid primary savings account, where one can establish their emergency savings (experts recommend three to six months of expenses as a minimum) and their general savings. Some of the factors to look at in establishing a primary savings account are: 1) top tier of interest rates; 2) An institution whose interest rates are stable rather than wildly fluctuating (sometimes the very top rates are "teaser" and do not remain there long); 3) a bank or credit union that is top rated--both in terms of financial stability and customer ratings (Some top interest rate banks and credit union have poor customer ratings). When choosing an institution for a CD investment--these same principles are applicable (stable and high interest rate, highly rated institution--with early withdrawal penalties being an additional factor to consider, as Ken T. often and wisely states.
deplorable 1
deplorable 1   |     |   Comment #5
Yep the first step when starting out is to find a good FREE checking account with a $0 minimum balance requirement so you don't incur any fees for going under a balance. Then the second step is to find the highest yielding savings account you can find and link it to your checking. Then put any extra money above bills into the savings account rather than in the 0% checking. Then you can start hunting for some CDs that beat your savings rate. I did this when I was a kid but sadly there are still many adults who have not managed to get even this far. Hopefully there are some younger readers learning on here.
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NYCDoug
NYCDoug   |     |   Comment #6
To build upon on kcfield's solid foundation: establishing these "primary" checking & savings accounts as "hub" accounts -- not only with low/no fees and required minimum balances, but multiple ACH connections (ideally unlimited) and rapid transfers (ideally overnight). This positions you to have easy access to your money as well to be able to take advantage of the many higher interest rate (promotional) offers found at this site.

I have found it useful to have two hub accounts. One "on the ground" [so-called "brick & mortar"] -- a checking account at a physical branch where cash withdrawals and cash/check deposits can be made any time, day or night, via ubiquitous ATMs. The other "in the air" [online] -- a savings account with a high interest rate, used to pivot funds into and out of even higher interest rate CDs as they arise, and subsequently mature.

The game in finding these accounts is that they are moving targets; interest rates fluctuate. And there are always trade-offs (for example, a high rate, with rapid transfers, but limited ACH connections, or a required minimum balance to avoid fees). So, in addition to all the listings that Deposit Accounts provides, perhaps a matrix summarizing the account attributes of, say, the top five viable hub accounts would prove indispensable for newbies, as well as for us veterans.

To start, attributes for hub account comparison tables [one checking, one savings] could include
- Bank Name
- Online / Branch
- Interest Rate
- Minimum Balance to avoid fees
- Number of ACH Connections Allowed
- Speed of ACH transfers
- Comments / Other [website, customer service . . . ]
kcfield
kcfield   |     |   Comment #11
NYC: Excellent points, especially with respect to establishing more than one hub accounts and ensuring excellent ACH connections. It is helpful if at least one of these hubs has high daily ACH limits if one transfers significant funds regularly. For example, AMEX savings has no daily ACH limits.
NYCDoug
NYCDoug   |     |   Comment #13
I forgot about the daily/monthly transfer limits, KC -- Yes, a must-include!

This can be a deal breaker, though less likely so for those just getting started -- with less capital to burn or churn than we . . .

But please do add it to our growing "cafeteria of criteria" matrix wishlist, Lauren!

It takes a village ;-)
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HighYield
HighYield   |     |   Comment #10
Nice article by Ms Perez.

Basic banking comment? I respectfully suggest that most people make it way too complicated.
For young people just starting out, my parents gave me one very simple bit of advice: When you get your paycheck, immediately put 10% of it into a savings account. And don't touch it! That advice has served me well my entire working life. And even in retirement.

Now days, there are many good online banks, with no fees. It couldn't get any simpler.
HighYield
HighYield   |     |   Comment #14
I should add, if you're talking your average young person, it seems like so many younger people are struggling, financially. And understandably so. It may be difficult to even get them interested in banking/saving. They may have very little to put away, so I just suggest they keep it as simple as possible.

They don't need to be overwhelmed by all the bank technical details. Just a basic online savings acct, and maybe get a CD when they can afford one. At least that's a start.
deplorable 1
deplorable 1   |     |   Comment #18
This is the very reason these basics need to be taught in school from a early age. We have a entire generation of kids who all have smartphones yet don't even have a basic savings account. They have no clue that one of the best financial tools available is right in their pocket. Look at this recent government shut down for a good example. You have adults that have no savings and can't even go a week without a paycheck before they are lining up at food pantries. We can teach advanced math in high school but somehow basic banking and financial literacy are completely neglected.
Mobile Banking
Mobile Banking   |     |   Comment #19
Regarding Smartphones:
Maybe some people are unaware, but a phone is the most unsecure internet connection available. It is not advised to use a phone for any banking, yet banks push users to install their application and use it. It is sold as convenient, but that convenience is not worth the risk. The problem is that Wi-fi connections are not secure.
deplorable 1
deplorable 1   |     |   Comment #23
I agree and I personally do all of my banking on a windows based machine on a hard line. Many will argue that with encryption this precaution is unnecessary and that may be true to some extent but certainly not with public wifi.
senior
senior   |     |   Comment #27
Excellent comments deplorable 1. When I was in high school back in the 70s, (46 yrs ago!) there was an elective class called "You and Your Money." A great class that taught all the basics about banking & saving & check writing. I really enjoyed it. I don't believe any high schools offer a class like that anymore.
LaurenPerez
LaurenPerez   |     |   Comment #12
Thank you all for your quick responses! We appreciate your continued contributions, and we will work on incorporating your ideas in future articles as we build this series.
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Chex Sys
Chex Sys   |     |   Comment #20
There is a lot of information available about credit scores and how they effect the consumer. I have not seen too much written about Chex System. It would be interesting to know more about how that works. For example, how many new accounts can someone open before they are red flagged at Chex System?
???
???   |     |   Comment #21
https://www.depositaccounts.com/blog/chexsystems.html
Chex Sys
Chex Sys   |     |   Comment #22
Yes, thank you, I am aware of that article and have read it. It was very thorough, however the question I had was not addressed in that article.
klink
klink   |     |   Comment #28
Read the latest, I would think that another couple covering Establish Budget and Emergency Fund would fit right in this series. Alas, not sure it goes with the "Banking" 101 moniker but it could be tied in somehow.

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