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Basic Banking Guide

Written by Lauren Perez | Updated on 1/3/2020

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: Using a Flexible Spending Account (FSA) for Medical Expenses

A flexible savings account (FSAs) is a savings account dedicated for select medical costs. You fund the account with pretax contributions from your paycheck, and you can use the money for eligible expenses. Your health insurance plan does not cover all your medical expenses — copays, prescriptions and lab charges are paid out of your pocket — FSAs exist to help you pay all these extra costs. These days, rising health care costs are straining people’s finances. It’s not just a sudden doctor’s visit; increasing numbers of Americans are now saddled with high-deductible health insurance plans that can burden them with thousands of dollars in out-of-pocket health care costs. Read more

Banking 101: What a Patriot Bond Is and What to Do With It

Savings bonds are low-risk investments backed by the U.S. government. After you purchase the bond, you’ll get back the principal, plus interest. Several types of savings bonds exist, and not all earn interest the same way. For example, Patriot Bonds, which are classified as Series EE bonds, are guaranteed to double in value after 20 years, provided they were purchased in June 2003 or later. Ken Tumin, founder of DepositAccounts, said that’s an annual rate of return of about 3.5% — not too shabby considering that the current 30-year treasury yield was just over 2.2% in November 2019. But what are Patriot Bonds, exactly? Here’s everything you need to know, from how to cash a Patriot Bond to whether it’s possible to get your money early. Read more

Banking 101: 401(k) Loan - Should You Take a Loan Against Your 401(k)?

Do you need to borrow money but don’t want to deal with a high-interest credit card or personal loan? If you’ve been saving for retirement with a 401(k) plan through work (and your plan allows it), taking a loan from your 401(k) can be a low-cost way to borrow money from yourself and pay yourself back — with interest. However, 401(k) loans aren’t risk-free. They have some serious tax implications if they’re not paid back in the appropriate amount of time. Read on to learn more about how to get a 401(k) loan, and the pros and cons of this type of loan.Read more

Banking 101: How ACH Transfers Work

ACH transfers let you send or receive money via your bank accounts. Whether you’re paying bills online, receiving your paycheck via direct deposit or using Venmo to pay back a friend from your checking account, money is moving from one bank account to another via ACH transfer. ACH transfers are generally available within one to two business days and are facilitated by a payment system called the Automated Clearinghouse system. This electronic funds transfer network is one of the key components of the U.S. banking system. Read more

Banking 101: Everything You Need to Know About ChexSystems

When you apply to open a new checking or savings account, banks and credit unions do a background check before agreeing to take you on as a customer. ChexSystems is the go-to reporting agency that provides background reports on your banking history. Reports from ChexSystems, also referred to as consumer disclosures, include information about problems, misuse or fraudulent activity that occurred with your checking or savings accounts. The process is very similar to when lenders check your credit score before giving you a credit card or an auto loan. Many, if not most, financial institutions rely on ChexSystems to help vet you. We’ve taken a closer look at the information that is included in ChexSystems reports, and tell you what you can do if the reports are preventing you from getting the checking or savings account you need. Read more

Banking 101: Bank Fraud - How to Recognize It, Avoid It, and Report It

Despite an overall decline in fraud, high-impact bank fraud — which includes opening new accounts under a victim's name and taking over a victim's existing account via mobile phone — is on the rise, according to Javelin’s 2019 Identity Fraud Study. Nearly a quarter of fraud victims paid out-of-pocket costs as targets of fraud in 2018, almost three times as many as in 2016. Here's how you can stay ahead of potential threats and avoid falling victim to bank fraud. Read more

Banking 101: Saving vs. Investing - Which Option is Better for Your Money?

Are you trying to weigh the benefits of saving vs. investing? The quick answer is that both could be necessary for a healthy financial life. Even though it might seem complicated, you can save and invest at the same time to accomplish different financial goals. Your savings should be used to cover emergency expenses and intermediate goals, such as buying a house. Investing can help you plan for retirement. Here’s how to know the difference between saving vs. investing and decide which one is best for your situation. Read more

Banking 101: Understanding the Different Types of Savings Accounts

There are different types of savings accounts depending on how you want to leverage your money. While checking accounts are typically for money that you’ll need access to regularly, savings accounts allow for fewer monthly transactions — often with higher interest rates. It’s important to know the difference between certificates of deposit, health savings accounts, individual retirement accounts (IRAs) and online savings accounts, to name a few. Here’s how to tell different savings options apart and how to decide what works best for you. Read more

Banking 101: Why You Need an Emergency Fund and How to Build It

An emergency fund is vital to your financial stability. Having a highly liquid pool of money to dip into when unforeseen expenses pop up means you won’t be forced to sell investments at a loss, or fall back on expensive credit card debt. While experts disagree on how much you should have saved in an emergency account — common advice varies from three months to nine months of living expenses, or even more — two analysts recently attempted to find a more concrete answer. Economists Emily Gallagher and Jorge Sabat found that if you have at least $2,467 stashed away, you should be able to weather any short-term, unexpected financial hardships. That amount doesn't seem too steep, but for many Americans, it's a mountain they haven't even attempted to climb. A Financial Industry Regulatory Authority (FINRA) study found that 46% of adult Americans have nothing saved as emergency funds. This is indeed a big problem. Read more

Banking 101: How to Transfer Money From One Bank to Another

If you need to transfer money from one bank to another, options abound. Though it may seem like a straightforward process, it can get a little confusing with all of the different methods, timelines and fees from moving money back and forth between bank accounts. There are so many choices for how to get this done that you may wonder which is the easiest, quickest and least expensive route to take. This guide will lay out the pros and cons of each option so you can determine which best meets your particular needs. Read more

Banking 101: Understanding IRA Rollover Rules

If you change employers or you’re ready to retire, you might wonder what you should do with your old 401(k). One option is to roll the 401(k) over into an individual retirement account (IRA). There are several good reasons to open a rollover IRA account. IRAs typically have more investment options than do 401(k) plans. And if you tend to hop jobs, you could wind up with a dozen or more accounts by the time you retire. A rollover IRA can help you to consolidate past and future 401(k) balances into one account, but rollovers can have tax consequences if you don’t follow the rules. Here’s what you should know. Read more

Banking 101: What Is a CD Loan and Should You Get One?

Certificates of deposit (CD) often pay higher interest rates than regular savings accounts. However, your money is locked up for the term of the CD. Withdrawing money from a CD before it matures typically incurs an early withdrawal penalty. CD loans offer one way for consumers to unlock the money they have in a certificate of deposit. With a CD loan, you borrow money by using the funds in a CD as security. This can be a good way to access liquidity without incurring early withdrawal penalties, although CD loans are not without costs of their own, in the form of interest and fees. Let’s take a closer look at how CD loans work, and decide when they might be worth your while. Read more

Banking 101: How to balance a checkbook

With banking becoming more digital-centric, balancing a checkbook can seem akin to using a rotary phone. However, there's some merit to writing a check and tracking your spending this way. When you balance your checkbook, you force yourself to track each transaction, which can help you become more mindful of your spending. Think of balancing a checkbook as a way to reset your financial life. It can be a back-to-the-basics money retreat or a cleansing. Here's everything you need to know about how to balance a checkbook. Read more

Banking 101: Do You Need a Rainy Day Fund If You Already Have an Emergency Fund?

Chances are you’ve probably read personal finance advice that says you should keep three to six months-worth of expenses in an emergency fund. You may also have heard that you should have a rainy day fund to pay for unforeseen needs. You might be wondering, what’s the real difference between the two? An emergency fund is your safety net for major expenses, stemming from things like job loss or expensive medical emergencies. Meanwhile, a rainy day fund helps you pay for lesser unexpected expenses, like a transmission replacement for your car or a leaking roof. While they sound similar, you need to save up for both sorts of emergencies. When you have a well-stocked rainy day fund and an emergency fund, you’re ready for whatever expenses life can throw your way without needing to resort to high interest credit cards or personal loans. Read more

Banking 101: How to Start Saving Money

If you want to save money but don’t know where to start, keep reading this guide to learn how you can improve your finances and quality of life. We’ll discuss choosing the right budgeting system and strategies, deciding where to keep your hard-earned savings and determining how much to save each month. We’ll also offer money-saving tips that could make a positive difference in your financial well-being. Read more

Banking 101: Practical Retirement Strategies

Saving for retirement is one of your most important financial goals. A 2019 survey from the Transamerica Center for Retirement Studies found that 75% of workers are saving for retirement through an employer-backed plan, such as a 401(k), or something outside the workplace, such as an individual retirement account (IRA). While that is good news, the same study revealed that almost 50% are just guessing how much they'll need to retire. It's good if you're saving for retirement, but it's much better if you have a plan. Here are some common retirement strategies you can implement right now. Read more

Banking 101: Are CDs Worth It Right Now?

Despite the Fed cutting rates again recently by a quarter percentage point and market interest rates declining, CDs are worth it right now. Still, there are several factors to consider to determine whether it’s currently your best deposit account option. When it comes to saving your money, your three main options are savings accounts, money market accounts and certificates of deposit (CDs). Savings accounts and money market accounts work similarly in that you can transfer money in and out of them, up to a limit. Both have variable interest rates, meaning rates fluctuate over time. Money market accounts usually offer higher rates than savings accounts, though you may face more fees. CDs, on the other hand, have fixed interest rates. Additionally, when you put money into a CD, you can’t withdraw it for a certain time period without paying a penalty. While savings accounts and money market accounts are ideal for emergency funds or short-term savings goals, CDs make more sense for slightly longer term savings goals, particularly when rates are falling. Read more

Banking 101: How Inflation is Affecting Your Money

Inflation, according to the Bureau of Labor Statistics, is the upward price movement of goods and services. In more relatable terms, inflation is what happens when things like health insurance, houses and food gets more expensive over time. When inflation goes up, the buying power of one dollar goes down. Currently, the inflation rate is 1.7%. That number might seem small, but there's a lot of power behind it. Inflation has plenty of influence on your savings, investments, loans and more. Read more

Banking 101: What Is the Average American Savings Account Balance?

A recent survey by ING showed that 27% of Americans admitted to having no savings — that’s zero dollars set aside for medical emergencies, car repairs and life’s other unexpected expenses. “The average American isn’t saving enough,” said Ken Tumin, founder and editor of DepositAccounts, a LendingTree subsidiary. “There’s too much debt and not enough commitment to saving.” Numbers like these are disconcerting, but they don’t tell the whole story. How much is in the average American savings account? Does that include retirement savings? And for those of us who might be lagging behind in savings, how do we improve? Let’s take a closer look. Read more

Banking 101: What Is a Market-Linked CD?

For the cautious investor, market-linked CDs present an opportunity to potentially participate in the upside of market growth without taking on large amounts of risk. That’s because a CD, short for a certificate of deposit, is a federally insured savings account. It grows over a set period of time, generally at a fixed interest rate. With a market-linked CD, the interest rate fluctuates with the market, giving the owner of the CD the potential to earn more interest than at a fixed rate. However, this type of CD does have its drawbacks. Not only are there different tax considerations with earnings, but the bank could call back the investment at any time, potentially wiping out the potential upside. Here’s how to decide if a market-linked CD is right for you. Read more

Banking 101: What Are Peer-to-Peer (P2P) Payments?

Americans are carrying less cash than ever. A recent DepositAccounts study found that one in every three Americans would not be able to make a $20 cash purchase without visiting an ATM, and about 22% said they weren’t carrying any cash at all. So what do cashless consumers do when they want to split the check at dinner, or pay their power bill without writing a check? That’s where peer-to-peer (P2P) payments come in. P2P payments are a type of digital transaction that allow for the transfer of funds between two people. These transactions are typically made through mobile apps — such as Venmo, Zelle or PayPal — that are linked directly to your bank account. There are plenty of situations where they come in handy. As DepositAccounts founder Ken Tumin put it, P2P payments “make it easier to live without cash.” That can mean repaying your friend for coffee, setting up recurring rent payments or transferring money between bank accounts. But how exactly does P2P work? Are there fees? And, most importantly, is it safe? Here’s everything you need to know about peer-to-peer payments. Read more

Banking 101: Brokered CD vs Bank CD - Understanding the Differences

Certificates of deposit (CD) are a great option if you’re looking for a secure vehicle for saving money, whether for a big goal like retirement or a long vacation, or just to park your emergency fund. As you research your CD options, you may come across terms like “bank CD” or “brokered CD” that seem puzzling. There are important differences between a traditional bank CD and a brokered CD that you need to understand before you invest. As their names suggest, you obtain a bank CDs from a bank or a credit union, while you buy a brokered CD from a brokerage like Charles Schwab or TD Ameritrade. The differences don’t stop there, however. While these two products are technically both certificates of deposit, the way they behave in practice is different, and these key differences can help or hinder you from reaching your financial goals. Read more

Banking 101: Understanding the Credit Union Shared Branching Network

Many customers prefer to maintain accounts with credit unions, because they like the not-for-profit ethos or want a great yield on a deposit account product, or both. But some readers may wonder if you need to give up convenient branch access with a local credit union, which may have a limited number of locations. The CO-OP Financial Services shared branch network was created to address this concern. When credit unions participate in the CO-OP shared branch network, their customers get access to the second-largest branch network in the country — after Wells Fargo’s network — counting more than 5,600 credit union branches in all 50 states. Read more

Banking 101: How to Determine Your Net Worth

You might associate the idea of net worth with only the very wealthiest members of society. After all, major celebrities, industry moguls and even presidential candidates are often categorized by their sky-high net worths. But calculating your net worth is an essential financial tool for everyone, not just for those with millions of dollars. Net worth is the total value of your assets minus the sum of your liabilities. In short, your net worth is what you own, minus what you owe. Calculating your net worth can help you get a better grip on your future financial goals by giving you a complete picture of your finances. Once you know your net worth, you can create a specific plan to improve your financial situation with the goal of increasing your net worth over time. Read more

Banking 101: What is a Credit Union?

A credit union is a nonprofit financial institution that’s owned by members, rather than shareholders, and is overseen by a volunteer board. Members of the credit union have the right to vote for board members and thus help influence how the credit union is run. Because they operate a bit differently than for-profit financial institutions, credit unions sometimes boast lower fees and more competitive rates than what you’ll find at a competing bank. However, they also tend to be more exclusive. Many credit unions are set up for specific communities and only accept members from particular regions, professions or groups. Read more

Banking 101: How to Wire Money

Wire transfers can be a fast, easy and convenient way to send money to friends, loved ones and creditors, whether they’re located across town or around the world. They got their name — “wire” transfers — from the Western Union Company, which pioneered the concept of electronic money transfers in 1871 when it began moving money via telegraph wires. Instead of telegraphs, wire transfers today utilize secure electronic systems like SWIFT, Fedwire and the Clearing House Interbank Payments System, which support the transfer of money from one institution to another using either proprietary networks or the internet. Institutions can include banks and credit unions, and nonbank money transfer providers like Western Union and MoneyGram, among others. If you need to send money, however, you probably don’t care how wire transfers work exactly. Instead, what likely matters most to you is what’s required in order to execute them. Fortunately, there are only a handful of steps that are quick and easy — just like the transfers themselves. Read more

Banking 101: What Is the Durbin Amendment?

The Durbin Amendment is part of the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It may sound like an arcane part of Congress’s effort to reform giant, too-big-to-fail banks, however the Durbin Amendment impacts you every time you swipe your debit card. The 2008 financial crisis prompted the U.S. government to investigate the role banks played in crashing the nation’s economy and disrupting the financial lives of millions of Americans. Congress’s remedy was the Dodd-Frank Act, legislation which imposed stronger regulations on the financial industry. Sen. Dick Durbin of Illinois, however, felt Dodd-Frank didn’t go far enough. He introduced an amendment to the act that limited debit card transaction fees. While his intentions were good, the consequences ended up harming consumers in the long run. Read more

Banking 101: Daily ATM Withdrawal Limits at Popular Banks — And How to Avoid Them

If you keep your money at one of the 20 largest banks in the country, your checking account will have a daily ATM withdrawal limit between $300 and $5,000. There are pros and cons to being on either end, DepositAccounts founder Ken Tumin said. “Larger withdrawal limits can be beneficial to consumers when they need a large amount of cash,” Tumin said. “However, larger limits do increase the risk that criminals will be able to steal a larger amount of money.” These criminals could be loitering around the ATM, waiting for you to withdraw cash. Knowing specific bank ATM withdrawal limits can help you figure out which checking account is best for your circumstances. Read more

Banking 101: HRA vs. HSA - What's the Difference?

It’s time for you to elect your new insurance benefits at work. You’re presented with several options, which can easily become overwhelming. Health reimbursement accounts (HRAs) and health savings accounts (HSAs) are two common health care terms that seem similar but have major differences. Both help you pay for eligible health care expenses. However, each product differs in how you fund it, how you use it for purchases, its tax advantages and more. Let’s dive into HRA vs. HSA, and explore which option is better for you. Read more

Banking 101: The Best Money-Saving Apps

Many Americans are on shaky financial ground. According to a 2018 report from the Federal Reserve, 40% of people wouldn’t have the money to cover an unexpected expense of $400 or would have to sell something or borrow money to do so. The good news is that technology makes saving money easier than ever today. There are apps that can help you set goals, store money and put you on a path to a solid financial future. Robert R. Johnson, a professor of finance at Creighton University in Nebraska, said people should try to automate as many financial decisions as they can. “One has to make saving and investing money a habit,” he said. “Habits — good or bad — develop over time. One of the best ways to save money is to make it automatic.” He said money-saving apps cater to our psychological bias for activities in which we see success. Some apps also offer game-like elements that can make saving fun. Read more

Banking 101: What Is the Social Security Trust Fund?

Social Security was originally created in the 1930s to give workers a source of income once they reached retirement. Today, the program doesn’t just help retirees, but also provides financial benefits to disabled workers and the families of workers who’ve passed away. Millions depend upon the financial benefits of Social Security. In May 2019, more than 68.5 million Americans received either Social Security, Supplemental Security Income (SSI) or both. According to the Social Security Administration, one in five Americans receives a Social Security benefit. The funds that pay Social Security benefits are collected from payroll taxes on employees and employers. The money raised is placed in the Social Security trust fund maintained by the U.S. Treasury. Unfortunately, the Social Security trust fund is projected to be depleted by 2035 if no adjustments are made to how much is brought in from taxes or paid out as benefits. Let’s take a look at how the Social Security trust fund works and how it was established in the first place. We’ll also cover what you can expect from Social Security once the program’s costs begin to exceed its income — projected to take place in 2020. Read more

Banking 101: How to Send Money to Someone Without a Bank Account

There are plenty of ways to send money to people that don’t involve cash in an envelope. Online payment apps let you transfer funds to friends and relatives instantly. Some people still write checks and send them by mail, like the $20 you got from your grandmother on your birthday. But sending money becomes more complicated when the recipient doesn’t have a bank account. Read more

Banking 101: How to Get a Debit Card

Debit cards are a great way to manage your personal spending, minimize the amount of cash you carry and avoid running up a credit card balance. They are universally accepted as a payment method at stores and on the internet, and you are seldom very far from an ATM where you can use your debit card to withdraw cash. Here’s what you need to know about getting a debit card, and their potential risks. Read more

Banking 101: What is Check Kiting and How to Avoid Getting Scammed

You may not think of writing a check as making a promise, but that's essentially what you're doing: You promise the recipient that your account has the funds needed to clear the transaction. Check kiting happens when a person knowingly makes out a check his account can't cover, deposits the bad check with a financial institution separate from the one his account is at, and then withdraws money from the second financial institution. Read more

Banking 101: What to Do If You Receive Fake Money

Accepting fake money costs you real money. This unpleasant fact makes learning to spot fake money a critical skill, especially if you handle a lot of cash at work or in your day-to-day life. Fake bills are out there, despite continued security enhancements to real bills. Read more

Banking 101: Where Is the Account Number on a Check?

Knowing your checking account number can be crucial. If you want to set up direct deposit with your employer or need to make an electronic payment, you’ll need to know your account number. You can find that account number on a check. Someone new to check-writing or someone who hasn’t written one in a long time might need help, so here we are. Read more

Banking 101: How to Save for Retirement at Any Age

When it comes to planning your retirement, there's no such thing as being too fussy. You may have to live off your nest egg for more than 20 years if you retire at 65, according to data from the Social Security Administration, and that means keeping your powder dry through every stage of your life. In order to chart the smoothest course to a worry-free retirement, you need to adapt your saving priorities to what's going on in your life and the financial markets in general. While we can't predict the future, we can offer some evergreen tips on how to maximize your retirement savings for each decade of your life, as well as give some pointers you should be following no matter how old you are. Read more

Banking 101: The Glass-Steagall Act

The Glass-Steagall Act is older than Bob Dylan, “The Wizard of Oz” and the NBA, but its legacy still affects consumers every day. Signed by President Franklin D. Roosevelt in 1933, the act was passed in response to the Great Depression and aimed to restore the public’s faith in the U.S. banking system. The result was a series of rules that radically changed America’s financial landscape. Even though parts of the law were overturned by the Gramm-Leach-Bliley Act of 1999, Glass-Steagall remains a crucial part of how people deposit, borrow and invest their money. But what is the Glass-Steagall Act, exactly? And why is understanding its rules so important? Here’s everything you need to know about the Glass-Steagall Act. Read more

Banking 101: What Is a CD and How Does It Work?

Sometimes it seems like savings accounts only grow at a snail’s pace. Even if you have a decent sum of money saved, it can take a while to earn anything meaningful. This is where certificates of deposit — commonly abbreviated as CDs — can come into play. These timed deposits allow you to grow your savings even further. They’re generally insured by the Federal Deposit Insurance Corp. or National Credit Union Administration up to $250,000. Still, CDs aren’t right for everyone or for every case. So what is a CD? We’ll discuss what you need to know about CDs so you can get a full understanding of how they work. Read more

Banking 101: Use the Financial Pyramid to Guide Your Planning

Financial planning involves so much information across so many different topics that it can feel overwhelming. Where do you even get started? Two academics dreamed up a simple graphical chart to help clarify financial planning goals, and the financial pyramid was born. In a 2011 research paper, economic experts William Gale and Benjamin Harris proposed the financial pyramid simplifies how people thought about financial planning. Harris and Gale took the United States Department of Agriculture (USDA)’s well-known food pyramid as their model to help Americans figure out what matters most for financial planning. Read more

Banking 101: How to Write a Check

From paying rent to sending a wedding or Sweet 16 gift, there may be a time when you need to know how to write a check. Fortunately, writing a check is fairly easy. Even some of the best high-yield online checking accounts offer checks to their customers for those instances when they are necessary. Here are the six steps you’ll need to follow when filling out a check. Read more

Banking 101: What is a Certified Check?

A certified check is guaranteed by the financial institution that issues it. The bank or credit union will verify your signature and ensure that you have enough funds to cover the check. Someone selling a used car, for example, could ask to be paid by a check that is certified by your institution. By accepting a personal check instead, a seller could become a victim of check fraud, or the check could bounce. We’ll break down where you can get a check that is certified, as well as detail the risks involved. We’ll also compare these types of checks to other forms of payment, such as cashier’s checks and money orders. Read more

Banking 101: CDs vs. Savings Accounts - Which Should I Choose?

We all need to save for a rainy day. Having money set aside not only makes you feel more secure, but it also helps you reach your goals and prepares you for the inevitable financial bumps in the road of life. If you’re reading this article, you probably already made the decision to start saving money, but you might not be sure which type of savings vehicle is right for you. Some of the most common types you may be considering are certificates of deposit (CD), savings accounts and money market accounts. Each of these deposit accounts have their own specific uses, strengths and weaknesses. Read on to learn the differences between a CD vs. savings accounts. Read more

Banking 101: What is an NSF Fee?

Banks with more than $1 billion in assets collected more than $11.45 billion in overdraft and nonsufficient funds (NSF) fees in 2017, according to the Center for Responsible Lending. That total — compiled by the center using Federal Deposit Insurance Corp. data — is up $10 million from 2016 and 2.4% from 2015. The recent report labeled the upward trend as “troubling,” citing possible daily fees between $102 and $216 among those largest banks. The center said NSF fees, which a financial institution can charge to an account owner when they lack funds to cover a transaction, are extraordinarily high “in an era when processes are highly automated, and it costs little to the bank to deny a transaction.” If you have an account with little in it, these fees could be a recurring problem for you. Having a better understanding can help to keep you from paying these fees. Read more

Banking 101: Understanding Your Bank Statement

Whether you get your bank statement online or in the mail, you might wonder how to get a good handle on everything it’s telling you. Maybe you just have a few questions about different parts of the statement. What’s that monthly account fee? Why is your balance different than you expected? Is that an error you need to address? If so, who do you even call about it? Read more

Banking 101: What to Look for in Prepaid Debit Cards

You may not know it, but 8.4 million households in the United States are unbanked. An additional 24.2 million American households are underbanked, meaning they have obtained financial products and services (beyond a checking or savings account) outside of the banking system. But these aren’t just statistics; they are people who really need a way to pay. You might understand the struggles that many consumers go through to obtain a bank account. For the unbanked or underbanked, a prepaid debit card could be the only option available for making card payments. Read more

Banking 101: Annuity vs CD - How Do They Compare?

Annuities and certificates of deposit (CDs) represent different ways to save money, for retirement as well as other goals. Both savings vehicles give you the possibility to earn a higher return on your money than just parking your cash in a standard savings account. While both types of products may help you grow your nest egg, the way they accomplish this goal isn’t the same. Let’s review the key similarities and differences between annuities and CDs, along with the pros and cons of each account. Read more

Banking 101: Is Keeping Cash at Home Wise?

Cash is king, the saying goes. But is keeping cash at home really necessary? According to a 2018 Pew Research study, Americans are relying less on cash to fund their lifestyle, with 29 percent of participants not using any cash to make their typical weekly purchases. Even if you’re one of the people who don’t use cash regularly, it’s important to consider that keeping cash at home gives you flexibility to respond to emergency situations, especially when ATMs and electronic payments may not be functioning. The key is to avoid keeping too much money on hand, said Ken Tumin, founder and editor of DepositAccounts, a subsidiary of LendingTree. So, before you go hiding a large chunk of change under your mattress (THE worst place possible), you need to know the risks and make a plan. Read more

Banking 101: Why the 50/30/20 Rule is Better than the 10% Savings Rule

If you’re going to reach your financial goals, you need to save regularly. But saving money is tough, so you need rules to stick with. One very effective rule is to set a fixed savings rate in your budget, where every month you save a percentage of your salary for retirement and an emergency fund. For decades, a common rule of thumb has been that you should save 10% percent of your income for retirement. While that approach is clear and simple, it may no longer be appropriate for today. Another rule that could be a better fit for modern life is the 50/30/20 rule. We’re comparing these two budgeting strategies as well as showing how you can create your own personalized savings rate. Read more

Banking 101: How to Maximize Your Bank Accounts

When it comes to choosing the best bank accounts for your personal needs, there are plenty of factors to mull over. Extra fees, overdraft protection, interest rates and account types can really complicate your choices. Here’s the good news: With careful strategizing, it’s possible to minimize your fees, while maximizing the utility of your accounts and the interest they earn to safely grow your cash over time. From savings and checking to account rewards, here are some easy ways to make your bank accounts work in your favor. Read more

Banking 101: Is it Worth Writing a Postdated Check?

If you need to write a check but you don’t have enough money in your account to cover it, you might consider postdating the check. When you postdate a check, you put a future date on it rather than the current one. This attempts to delay a recipient from cashing the check until payment is due or there are sufficient funds in your checking account, among other reasons. But banks and credit unions will sometimes cash postdated checks before the date listed, so you need to be careful. Is it worth writing a postdated check? We’ll tell you what you need to know about these types of checks, as well as explain some of the cautions surrounding them. Read more

Banking 101: How Much Should I Have in Savings?

An emergency savings fund is a key tool for navigating life’s unexpected events. Medical expenses, job loss or a costly accident can happen when you least expect it. “You never know what kind of curveballs life is going to throw your way,” said Scott Snider, a Mellen Money Management certified financial planner. “You lose your job, the roof of your house requires replacement, you need new tires on your car. It's a lot easier to prepare for situations like these when you are in a sound financial position than to react after the fact.” Snider said he emphasizes to his clients the importance of saving for a rainy day. Read more

Banking 101: 5 Benefits of Online Banking

While traditional banks continue to operate brick-and-mortar branches, many elements of consumer banking have moved online. With a smart device and an internet connection, you can deposit a check, transfer money between accounts or check your balance, eliminating time-consuming trips to the bank. “Twenty-four-seven access to your accounts is a major benefit to online banking,” said Rachel Kampersal, a marketing communications and programs associate with American Consumer Credit Counseling in Auburndale, Mass. “This allows consumers to remain connected to their finances anytime, anywhere.” Read more

Banking 101: Free Checking Accounts

For most people, a checking account is the banking product they use most. Given the wide range of options available today, there is no reason to ever pay fees for a checking account. There are still so many kinds of free checking accounts available offering decent perks and excellent customer service that you’d be crazy to pay for fees for checking. You may think a few dollars here and there isn’t a big deal, but it can really add up, especially if you pay for ATM withdrawals or fall below a minimum daily balance requirement. Read more

Banking 101: Understanding the 10% Savings Rule

When it comes to financial planning, one of the most famous pieces of advice out there is that you should save 10% of your income to reach your retirement goals. It’s so common that even the Consumer Financial Protection Bureau describes it as a rule of thumb. But while the 10% savings target is a decent place to start, these days it may not be enough. Let’s take a closer look at where this advice came from and why it might not be enough to reach your financial goals. Also, we’ll help you set your own personal savings target, based on your own earnings and needs. Read more

Banking 101: What Are Liquid Assets?

War bonds, a government-backed financial tool that dates back more than a century, offer a unique combination of investment and patriotism. Over the years, the U.S. government has periodically sold bonds to raise money to cover the costs of war. In exchange, buyers can invest in their country and get a good market return on their savings. Read more

Banking 101: War Bonds - They May Be Worth More Than You Think

War bonds, a government-backed financial tool that dates back more than a century, offer a unique combination of investment and patriotism. Over the years, the U.S. government has periodically sold bonds to raise money to cover the costs of war. In exchange, buyers can invest in their country and get a good market return on their savings. Read more

Banking 101: What to Know About Series E Savings Bonds

Maybe you’re interested in government bonds as a way to add low-risk growth potential to your investment portfolio. Or maybe, like this author, you’ve just found some long-forgotten bonds in your closet, gifted to you at birth (thanks, Uncle Jack!). Either way, Series E savings bonds and their modern sibling, Series EE savings bonds, can be a little confusing — especially if you’re dealing with the old-school, paper kind. How do they work? Should you cash them in? Are they even still valid? Here’s what you need to know. Read more

Banking 101: Bonds vs. CDs - Which Is a Better Investment?

If you’re building a robust and well-rounded investment portfolio, you should consider investing in both bonds and certificates of deposit (CDs). Both CDs and bonds share similar features and performance, however investors should understand the key differences between them. Read more

Banking 101: How to Make the Most Out of the 52-Week Money Challenge

Think you can’t save any money? Think again. The 52-week money challenge, a plan that pushes you to save in growing increments each week, can not only help you save money, but it can help you have fun in the process. Read more

Banking 101: What Is a Bank Credit Report?

Many banks and credit unions will check your credit history to determine your track record as a banking customer and get a sense of your financial responsibility. In assembling the bank credit report, a bank or credit union may check with several sources, including the three credit reporting agencies, as well as ChexSystems, which compiles a history of consumer banking records. ChexSystems is a record of your most recent banking history, such as overdrafts, closed accounts and other activity. The more negative activity displayed on your report, the less likely you are to get approved to open a new deposit account at a bank. By law, negative activity must fall off your ChexSystems report after seven years. Often, ChexSystems will drop those items (save for bankruptcy) from a report after five years. In this post, we’ll review what factors into a bank credit report, how you can monitor your own credit report for accuracies and mistakes (and what to do if you find something fishy) and how you can improve your credit score. Read more

Banking 101: What is a Passbook Account?

Can’t remember a time when you didn’t manage your bank account from a computer or your smartphone? If so, there’s a good chance you’ve never heard of a passbook savings account. Passbook savings accounts aren’t as popular as they once were, so you’re in good company if you don’t know what they are. Read on to learn how these accounts operate and review some of the advantages and disadvantages of this retro style savings account. Read more

Banking 101: What to Do After You've Lost Your Debit Card

You may have experienced this sinking feeling before: You go to take your debit card out of your wallet and it’s not there. Perhaps you left it in an ATM, it fell out of your pocket or your wallet, or purse was stolen. Whatever the circumstances, if you lose your debit card, it is hard to get cash and make purchases, and you’re vulnerable to fraudulent activity. If you find yourself in this situation, it is important to act quickly, report the loss and request a replacement card. By moving swiftly, you can minimize potential headaches like accessing money without a card and disputing any fraudulent charges, and both the bank and federal law can offer more protection the sooner you report to them. Read more

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

Previous Comments
  |     |   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
  |     |   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.
  |     |   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 . . . ]
  |     |   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.
  |     |   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 ;-)
  |     |   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.
  |     |   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
  |     |   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
  |     |   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
  |     |   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.
  |     |   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.
  |     |   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.
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
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.
  |     |   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.
  |     |   Comment #31
First of all, your blog is excellent. You guide us in detail. But I have a confusion; basically, I have an amount of $30,000, and I want your opinion that it's better to invest this amount in property or put it in a savings account. Which is best for a good ROI?

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