Banking Basics

A bank is a business before anything else and they provide services to the consumer from bank accounts to loans and credit cards. A bank account is a good resource that can provide you a secure place to store your money, and help you manage your finances. Knowing how a bank works and what opening an account entails means you have armed yourself with the knowledge needed to help yourself be a savvy consumer in the future.


Banks vs Credit Unions?

Commercial Bank: Many banks we know fall under this category of financial institutions. Commercial banks are a for profit business that provides deposit account and make loans. These typically are owned by private investors and have a board of directors like other companies.

Credit Union: Credit unions are typically smaller companies that are non-profit financial institutions that are typically owned by their members. Credit unions provide many of the same services as a bank does. Each credit union has their own criteria on becoming a member and when you make a deposit with a credit union that is typically seen as becoming a partial owner of company.

Different types of checking accounts

  • Checking accounts let you deposit and withdraw money as well as make payments either with checks or a debit card.
  • Overdraft protection could be added to any checking account which would allow for funds to be transferred from another related account to cover insufficient funds. There are multiple checking account options that have various features and traits here are a few common ones listed below:
    • A Basic Checking account: is an account you would typically use to pay bills and other expenses and for other daily necessities. Some basic checking accounts will have fees and most banks will have certain requirements in order to avoid fees.
    • Online checking accounts: online accounts are accounts that forgo any type of physical transaction and allow you do everything online though mobile or online banking from electronic bill pays to direct deposits..
    • Interest-bearing Accounts: these accounts are better for people who have higher balances. The higher the balance the higher the interest rate you earn. These can have a high minimum balance that you are required to keep.
    • Student checking: these accounts typically cater to students with lower fees and lower minimum balance requirements if any. These also typically put emphasis on online banking since the younger demographic prefers the convenience of online banking.

Saving Accounts

  • Your savings account is where you keep the money you want to set aside for a period of time. In a savings account, the bank pays you interest on the money you have deposited.
  • Savings accounts just like checking accounts come in a variety of types, here are a few of the most common ones:
    • Basic Savings: many financial institutions will offer a basic saving and checking account together so that transfers between the accounts are made easier. These typically have a minimum balance and lower interest rate.
    • Money Market: these accounts generally have a higher minimum balance but they are a good place to invest your money since they have low risk and higher interest rates.
    • Certificates of Deposit (CD): much like money markets CDs are another way to invest while you’re saving. These accounts typically have high interest rates but in exchange for those high interest rates there are limitation on what you can withdraw.
    • Automatic savings: these are accounts at automatically withdraw from your checking account and is deposited into your savings account. These accounts are meant to help you develop good money habits.

Things to Consider

Always shop around before choosing which account is best for you!

  • When opening any account be sure you are aware of any and all restrictions and requirements. Here are a few examples:
    • Balance Requirements: make sure you know if the account you are opening has a balance requirement and ask yourself if it is something you can maintain.
    • Fees: Be aware of the fees that may be charged to your account. These may include fees for falling below a minimum balance, monthly service, overdrafts, transfer, check order, and ATM.
    • Restrictions: knowing if your account has restrictions like withdraw limits or transfer limits is important.
    • Interest: Be aware of what your institution’s interest rate is. Know whether it is fixed or variable.
    • Services: Taking advantage of services like bill pay and online banking are important to insure that you are getting the maximum utility out of your account.


  • Checks are paper contracts that allow you to transfer money whether it be to a person or to an institution for a service or product. A check is you giving permission to the bank to transfer the written amount of money to the person/business that the check is written for from the account listed on the check.
  • Checks will typically list your name and address as well as your account and routing number. When filling out a check you will fill in the date, who the check is to, the amount, and sign.
  • Example of a Check: