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Bank Account
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What are checking and savings accounts?
Checking and savings accounts are the two most popular types of deposit accounts banks offer. Checking accounts allow you to write checks or use debit cards against the balance of your account. Merchants generally treat transactions paid for by debit card or check as if they were cash transactions. This means you will not owe interest on anything paid for by check or debit card. You will, however, be assessed a fee if your account is overdrawn - unless you have overdraft protection. Savings accounts allow you to keep an amount of money in the bank and earn a small interest rate. They are generally completely liquid, meaning you can withdraw money at any time without a fee. A savings account is not a place to invest, as interest rates on these accounts are extremely low compared to investments in stocks or bonds.
Why are they important?
Checking and savings accounts form the backbone of personal finance. Without a checking account, it is nearly impossible to pay bills, since most companies will not accept paper currency (i.e., dollar bills) as payment. Savings accounts are usually kept as overdraft protection for checking accounts, or as holding places for emergency cash.
Steps:
- Research banks and credit unions in your area to find out which one best fits your needs.
- Gather the necessary documentation.
The bank will want to see your Social Security card or Tax ID, passport or other photo ID, and name, location and routing number (if you are transferring funds electronically) of your old bank.
- Call or visit the financial institution you have chosen.
When you call, ask to speak with the "new accounts" department. Tell the bank representative what kind of account you want, and ask about the bank's policies and procedures.
- Give the bank representative the needed information, and arrange to have your first deposit credited to the account.
The first deposit can be made by check, electronic funds transfer, and occasionally by credit card.
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