Banking

Better Than Your Mattress

Bank Accounts

Typically, bank accounts are either checking or savings accounts. A checking account is a type of bank deposit account that is designed for everyday money transactions. The money in a savings account, however, is not intended for daily use, but is instead meant to stay in the account so that it might earn interest over time.

Opening a Bank Account

Before you open a bank account, there are several questions you should ask:

  • Is there a minimum balance requirement on the account?
  • Are there any charges for check processing, online bill pay, or monthly service fees?
  • Are there fees to use the ATM or for telephone assistance?
  • What is the bank’s funds availability policy?

Keep in mind that your total account balance may not be available for your immediate use. Your bank may have a policy to hold some of your funds for a period of time. While funds are on hold, they are not included in your available balance.

Bouncing a Check

Once you have an account, you can access the available funds by using your ATM or debit card, using online bill pay, or by writing a check. If you write a check for more than the amount you have in your checking account, your check will “bounce,” which is a slang word for a check that cannot be processed because the person who wrote the check does not have enough money in his or her account to pay for the check. The bank may handle a bounced check in a couple of ways:

The bank may charge you a fee and return the check to the person or company who attempted to cash it. That person or company may notify you and may charge up to three times the amount of the check in penalties. Writing a check when you don’t have enough money in your account to pay it may also be a crime.
The bank may pay the check, require you to make a deposit to cover the difference, and charge you a fee or a penalty. Damages for insufficient checks cannot exceed $500 plus the value of the check.

ATM v. Debit Cards

ATM stands for automated teller machine. An ATM card can be used for basic banking, like depositing and withdrawing funds from your bank account. Transactions will sometimes include surcharges or fees depending on your bank and the ATM you are using. If there is a charge, you must be warned and given an opportunity to quit the transaction without charge.
While you can use a debit card to also make deposits and withdrawals from your bank account, you can also use it to make purchases both online and in stores similar to how you use a credit card. However, unlike a credit card, when you use a debit card, money for the purchase is immediately taken from your bank account.

Many banks will allow you use your debit card to make a cash withdrawal or purchase even if it is for more money than you have in your account. This is called overdraft protection. However, the bank cannot enroll you in overdraft protection without your permission. You should keep in mind that if you choose this feature, the bank will likely charge you significant overdraft fees for each item processed in overdraft and may also charge you a fee for each day your account remains in overdraft.

Whether your card is an ATM or debit card, be careful when carrying or using it. Always keep it in your possession and never share your personal identification number (PIN) with anyone. If you do lose your debit card or someone uses it without authorization, federal laws limit liability to $50 if you notify the debit card company within 60 days.

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