Using Financial Services
Banks are financial institutions that play an important role in helping people manage their money. Banks bring together those who want to borrow and those who want to deposit money and offer a safe and convenient way to keep track of your spending and start saving.
- Everyone in the economy can bank. Affordable CHECKING and SAVINGS accounts make entry into the “banking world” easy for young adults and others in the society who were formerly unbanked.
- Many banks offer a basic account with a minimum or no monthly maintenance fee and no minimum balance requirement. Most banks offer free student accounts. It’s important to shop around for the lowest cost of banking.
Banking Financial Services
- Banks are supervised and regulated by the state and federal governments.
- Deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC), so your money is safe.
Checking accounts typically come with a CHECKBOOK, DEBIT CARD, and MOBILE BANKING OPTIONS and are meant for frequent transactions, i.e. withdrawing cash, paying bills, debit card charges and depositing checks.
- Banks provide a way to keep records of all your transactions.
- Banks provide a way to earn INTEREST on money by opening a savings account or a CERTIFICATE OF DEPOSIT (CD).
- Banks encourage DIRECT DEPOSIT of your paycheck and other payments, allowing you to access your money immediately.
- Having a bank account will help you ESTABLISH CREDIT
Credit Unions are nonprofit financial institutions that are alternatives to banks that usually serve their own members (e.g., a group with the same employer, club, union, or other affiliation).
Many people opt to open accounts with an ONLINE BANK and avoid traditional banks altogether.
People who choose not to use banks often use where fees for services add up.
Tips for Choosing a Bank that’s Right for You and Avoiding Fees.
Remember that banks are businesses and consumers must act as shoppers by finding a bank that best fits their needs.
Things to look for in a bank:
- Location and convenience: number and location of ATMs in your area.
- Account minimums: amount needed to open account and minimum required to maintain account, or else how you can avoid fees altogether.
- Potential charges (see chart above)
Generally, to open an account you need the following:
- Photo ID
- Social security number
- Proof of address
- Money to deposit
You need to be 18 years old to set up your own bank account, although your can have an account linked to an adult from age 14.
Choosing between a bank and a credit union involves some tradeoffs.
- If you are eligible to join a credit union, they generally provide better customer service. Credit unions also offer higher interest rates on deposits and lower rates on loans.
- Banks often adopt new technology and tools more quickly. Broad ATM and branch networks are the norm for big banks; credit unions rely on large, cooperative networks of ATMs and shared branches.
Resources for opening and managing your bank accounts.
NYC.gov has created a special website that allows consumers to compare low-cost banking options in their zip codes.