Bank accounts

A bank account is a safe, secure place to store your money until you spend it. When choosing a bank, consider:

• You want to use a bank you can trust. Look for an FDIC-insured bank.
• There are many types of banks. If you don't have, or don't want to use, a traditional bank, look for alternative banks, such as credit unions and thrifts, which can often provide personalized service and special deals to members of their community.
• Make sure you are aware of the fees associated with each account.

Even if you have to pay a fee, having a bank account can save you money. If you don't have a bank account, for example, you may have to pay a high fee to cash a check. Having a bank account can mean you have a convenient place to deposit your pay check so you can use the money for bills and purchases later.

The two basic bank accounts: checking and savings:

Checking Accounts
Checking accounts usually don't pay interest. They are usually accounts in which you "store" money only temporarily—you use the account a lot, to pay bills (online or by check), deposit your wages, and take out money for cash. (Some savings or money market accounts offer checks, but usually with more restrictions than true checking accounts.)

You'll probably need a checking account if you want to move down the road to financial empowerment—to build credit, to get a credit card, to begin saving.

Balancing a Checkbook
Often a checking account is the first and most important step toward building a solid financial base. For any checking account to work for you, a little effort and discipline must be applied by balancing your checkbook every month. With a balanced checkbook you will know what you are actually spending each month, any opportunity you may have to save additional money and if the bank has made any errors.

Your checks come with a "ledger book". The ledger is where you should be recording every check written, each deposit made and anything you do at an ATM (like withdrawing cash). Be sure to write each item down immediately when it has occurred, otherwise you are likely to forget or write it down incorrectly. Missing transactions or incorrect notations are the most common ways individuals will "bounce" a check.

Once a month you will receive a statement from your bank. The bank statement lists all the transactions that the bank has processed on your account. This will include any fees that the bank has charged you for overdraft, wires, maintenance or other services provided. By comparing your ledger to the bank statement you can:

• Balance your checkbook to determine the most accurate and current balance on your account.
• Identify any mistakes that the bank may have made.
• Track the types of expenses you are incurring to determine if there is a way for you to save money the following month.