Financial Literacy: Savings and Checking Accounts

Last month, we launched our Digital Financial Literacy Program. This program is designed to provide easy-to-understand information to help people better understand their finances and make decisions. Through this program, we hope to provide financial literacy to everyone. To complement our program, we will be offering tips, information, and news related to financial literacy. Today’s article is about the banking basics, more specifically, the two main types of bank accounts you can open at banks and credit unions.

Types of Banking Accounts

Savings Accounts: A savings account is a place where you can store your money and earn interest. Usually, this money is the money you would like to “save” for a later date. Many people use savings accounts as a cushion or safety net for future unexpected occurrences. Or you can use a savings account to put aside money for a large future purchase like the down payment on a house or for a vacation.

• Interest: A savings account will accrue interest, the amount varies from financial institution to financial institution.  It’s important to be sure to do your due diligence when deciding where to house your money.

Checking Accounts: A checking account allows you to deposit and withdraw money to make payments. It is where people often keep the money they need for everyday expenses. There is no limit on the number of withdrawals you can make from a checking account. Most checking accounts come with personal checks or a debit card to access the money in your account. You can pay directly with the checks or debit card, or you can withdraw cash from a bank or ATM.

• Fees: Most checking accounts are accompanied by fees, which is something to research when deciding on a financial institution. The most common fees are maintenance fees (which some banks will waive if you meet specific guidelines) and overdraft fees. A financial institution can impose an overdraft fee or a non-sufficient funds fee when a transaction exceeds your available balance. Overdraft fees and non-sufficient funds fees can be expensive and should be avoided if at all possible.

Most people use checking and savings accounts in tandem, and it is important to do your research on both types.  Don’t be afraid to call or research online to find the best with the best account options for you. Both savings and checking accounts are great avenues to keep your money safe and secure for the future.