Banking Services This lesson will introduce you to: Why you’d want a checking, savings, or other bank account 5 fees you need to know by name, 4 benefits to banking Welcome to Banking Basics. In this video series we’re going to cover some of the central tenets involved in your banking relationships. If you’ve never opened an account or if you’ve been banking for years, we hope you’ll learn important common sense practices. In this first part of the Banking Basics video set, we’ll discuss the bank accounts most likely used by college students, we’ll name 5 fees that you need to know and avoid, and we’ll give you 4 benefits of banking. Let’s get started with the money that’s in your wallet. It’s green and made of 75% cotton and 25% linen and it’s accepted anywhere in the US as a form of currency. Of course, we’re talking about cash. When you were younger and you had to buy something you probably did it with cash. But using cash isn’t always the safest or most practical way to purchase something and as your spending habits matured, you likely have or will turn to other forms of payment. This is likely where your banking relationship begins. Most of us start with a checking account. With the majority of American workers receiving their pay check in the form of direct deposit to a checking account, this account is the main ingredient in your financial kitchen. The account is likely tied to a debit and ATM card used for everyday expenses and monthly bills. Because the money in that account doesn’t usually stay in the bank very long, these accounts generally gain very little interest. Savings accounts, on the other hand, typically earn you a higher interest rate because there are fewer transactions and the money generally stays in the account longer. It’s a good rule of thumb to transfer a little money from your checking into your savings every month if you can afford it. The development of a rainy-day “cushion” is a big step in building financial security. The account is secure, earns interest, and hopefully an emergency never arises. The final account you might need in college or soon after is a certificate of deposit – also known as a CD. A CD’s interest rate is usually higher than a normal savings account interest rate. In exchange, you agree not to take out the money for a set number of months. The longer the timeframe, the higher the interest rate you’ll earn. The money still belongs to you and you can take it out sooner if needed, but there’s generally a fee involved. Speaking of fees, here are 5 fees that you need to be aware of when considering your banking relationship. 1. NSF Fee – Also known as non-sufficient funds fee or overdraft fee. It happens when you withdraw more money from your account than you have in there. 2. ATM Fee – This fee is for the convenience of using an ATM to get cash. Also, you could be charged twice on the same transaction if you use another bank’s ATM. 3. Check Order Fee – The cost to order paper checks 4. Monthly Account Fees – Some banks charge a fee if you don’t keep a minimum balance or meet other requirements. Check with your bank to learn how to avoid this fee. 5. Online Bill Pay Fee – A fee for the convenience of paying bills online. Avoid these fees and your banking relationship can bear interest and be fruitful. Here are 4 benefits of banking. 1. Safety – The biggest advantage to keeping your money in the bank is that it’s FDIC insured – which means your money is safe up to the FDIC limit. 2. Debit acceptance – Your debit card is likely accepted at most of the places you shop. That buying power is a great convenience. 3. Interest – With interest, the bank pays you money as an incentive to keep your money in the bank. 4. Access to cash – With ATMs it’s easy to get cash quickly. With so many benefits, properly handling your accounts becomes your next responsibility. We’ll cover that in a future video.