You’ll need somewhere to stash all that hard-earned money from your job. And even if you aren’t employed yet, chances are that you’ll receive a financial windfall from a family member or friend along the way.
Look no further than a financial institution.
Now, I know you may be wondering why in the heck you even need a bank or a credit union.
Why can’t you just stuff your hard-earned cash into an oversized pink piggy bank and slide it under your bed?
You could take that route, but a bank account may be a wiser choice. Here’s why:
The Benefits of Banking
Beyond serving as a safe-haven for your funds, banks offer the following perks:
Safety
If you have a few thousand – or even a few hundred – dollars to your name, you definitely don’t want to carry it around everywhere you go.
But you may also have reservations about stashing it away in your home. However, banks offer a safe alternative place for you to put your money without fear of theft. Plus, you can access it from practically anywhere in the nation (and in most places abroad) with your debit card or with a check.
Insurance
Most banks are backed by the Federal Deposit Insurance Corporation (FDIC), which insures all deposits for up to $250,000. The same protection is offered by credit unions under the National Credit Union Share Insurance Fund (NCUSIF), which also insures all deposits up to $250,000.
Wealth-Building Mechanism
You probably won’t build a ton of wealth by having your funds sitting in a bank account, since the interest rates are so low.
However, regularly stowing funds away will enable you to accumulate a large enough amount to start investing and building wealth.
Relationship Building
At some point, you may need to secure financing to purchase a car, home, or even open your first credit card. If you’ve established a solid relationship with your bank over the years, the barriers to entry will more than likely be much lower.
What Banks Offer
Most banks and credit unions offer a plethora of financial products, including:
- Checking accounts
- Savings accounts
- Money market accounts
- Certificates of Deposit
- Loans (home, auto, personal, business)
- Educational resources
How to Choose
Not all banks are created equal, so you want to proceed with caution when analyzing your options. Here are some items to consider:
Type of Financial Institution: Do you prefer a major bank, an online bank, a community bank, or a credit union?
Product Offerings: What types of financial products do they offer?
Insurance: Are deposits federally insured by the FDIC or NCUSIF?
Fees: What types of fees are account holders assessed for? Keep in mind both account maintenance and transaction-related issues.
Electronic Banking: Do they offer online banking?
ATMs: Are ATMs available throughout the nation, or solely in select states? Is there a fee to make withdrawals?
Direct Deposit Capabilities: Can account holders have their wages deposited on payday? Are electronic fund transfers permitted?
Location: Is the bank online or in a physical location?
Customer Service: Are they available to address your questions or concerns during the hours that are most convenient for you? Do they offer exceptional customer service on-site? How are the wait times in the lobby?
Other Resources: Are there financial literacy resources and programs available to assist you?
Your First Bank Account
To open your first bank account, you will need to be mindful of the following:
Requirements: What criteria must you meet to qualify for a checking or savings account?
Initial Deposit: How much will you need to open an account?
Restrictions: Is there a minimum balance you must maintain to keep the account open or avoid monthly transaction fees?
Perks: What are the primary benefits of having the account?
Fortunately, most financial institutions offer a low-cost (or free) student checking and savings account bundle to get you started!
