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Browse Category: Money Minute

Money Minute 2: Choosing an Institution

When dealing with your hard-earned money, keeping it somewhere safe and trustworthy is an important concern. Making sure that your primary financial institution is FDIC ensured is essential, should an economic crisis occur. Some banks and credit unions are more reliable than others and trustworthy about fees and limits in account usage. It can be difficult to choose a bank because of the many options that are available.

Convenience is an important factor when choosing a specific bank or credit union. Having a nearby brick-and-mortar institution is not nearly as important as it used to be in the previous century because of the internet. Most large banks in the US have online services and mobile apps. Smaller banks tend to have outdated services that are less reliable. Some people may find services like PayPal and Square Cash as a convenience, but these are money transferring services, not banks. While PayPal and other services allow you to technically store a balance, they are not obligated to follow consumer-protecting banking regulations in the United States, and they do not loan money. In the United Kingdom, PayPal is recognized as a bank and must follow the local regulations.

In order to find the “right” place to store your money, research is needed. Most of the information needed is available by searching online, as well as by reaching out to banks you might be interested in. Many other people have done all the research on individual institutions and posted their thoughts on the different pros and cons of different banks and accounts online. You need to look for things relevant to you. Likely, it’s more convenient to have multiple accounts from a single bank than to have across several banks, because it is often easier to transfer funds between accounts. Some banks charge fees to transfer funds outside of their institution, while others do not. There are also options of overdraft protection on checking accounts, such as instantaneously pulling a balance from a savings account or running a temporary line of credit.

Coming up: KEEPING TRACK OF BILLS

Money Minute 1: Bank Accounts

This is a new series of posts that we are trialing.

The first process of gaining money, lazily or not, is to have a safe manageable place to store it depending on how you use it. It is often best to have multiple bank accounts to manage your finances to suit your needs. The two primary types of bank accounts are SAVINGS and CHECKING accounts. Checking accounts are more flexible for frequent usage and spending, such as to pay bills and make purchases. Savings accounts are for saving for the future, with some accruing interest. These often have limits about the number of withdrawals that can be made to the account each month. Checking accounts occasionally have some accruing interest based on the lowest balance of the month.

Depending on the bank, you should always be wary of usage and overdraft fees. Every bank account has it’s own pros and cons, which is why it can be difficult to choose. Some are free to open, while others charge a monthly or one-time fee. Some are for personal use, while others are for businesses, small and large. Some are brick-and-mortar, and some are only online. Some require a minimal balance or frequency of use before charging a fee.

Coming up: CHOOSING A BANKING INSTITUTION