Basic Bank Accounts

With the ever growing technology that is available in the banking industry, it has become necessary to understand basic bank accounts.

It is hard to imagine your life without a bank account in the 21^st century. Banking and technology sectors, enjoying high growth in the past decade, collaborated on their efforts to enable consumers to manage their finances easier than ever. Receiving a paycheck from your employer, paying bills online, making purchases in a local supermarket, and filling your car with gas – this all is possible today without having even a penny in your pocket. Despite the fact that most consumers have taken advantage of everything banks have to offer today, many consumers are simply not aware of their banking options.

A special supplement to the U.S. Census Bureau’s Current Population Survey (CPS), sponsored by the FDIC, was conducted in January 2009. The results were quite shocking. The survey revealed that approximately 9 million of U.S. households, an estimated 7.7 percent, do not have a bank account at all. A percentage of underbanked households, having only basic bank accounts, such as only checking or savings, almost passed 18% mark – a whopping 21 million families! These are the people who did not only fail to utilize all the advantages of banking industry, but also do spend significant amounts of money on costly alternatives, such as check-cashing services, payday loans, and non-bank money orders.

Therefore, it is important to understand how basic bank accounts work and how they may benefit you. Knowing the banking industry products may help you to minimize expenses and maximize savings. There is a wide array of accounts to choose from, tailored to meet your individual needs: checking, savings, CDs, and money market accounts.

Checking account is a must-have for everybody, as it allows for effective money management. Checking accounts allow for easy bill payments by checks, debit cards, or ACH transfers, as well as a safe and worry-free access to cash from the wide network of ATMs.

Savings account is an effective way to start saving money. While savings accounts offer less return compared to other interest-bearing accounts and investment options, they are perfect for starters with their less-stringent balance requirements and easy access to cash.

CDs, also known as Certificates of Deposit, offer a better interest on savings, but are subject to some restrictions. In order to get the proposed return on your money, early withdrawals are not allowed, i.e. your money is locked for a set period. In addition, most CDs have minimum opening requirements, typically starting from $500 for basic bank accounts, with some being as high as $50,000.

Money market account is a sophisticated banking instrument that combines the features of the above three account types. While it may be of interest to individuals with high net worth, it is usually non-beneficial for consumers who live paycheck to paycheck or have very little savings.

Understanding basic bank accounts and using them for your benefit is important. It not only allows for banking convenience and saving money, but also encourages responsible financial behavior. This site is filled with information to help you choose the basic bank accounts that best suit your needs.