Money management and financial literacy rely heavily on how well an individual understands personal banking. Regardless of where you are on your personal banking journey, this guide will give you basic tips on how to use the services of community banks. From how banks work to checking and saving accounts, we’ll cover almost everything you need to know about interacting with your financial institution. For everything else, our team at Bank Midwest is always ready to give advice and answer your questions.
Where are you on your banking journey?
About 95% of U.S. households have a bank account, the highest number to date according to The Federal Deposit Insurance Corporation (FDIC). Odds are, you’ve dabbled in the world of personal banking, but may not be getting the most out of your financial experience. Depending on your personal goals and circumstances, your community bank can help you achieve them through education and smart decision-making.
Here is some basic vocabulary that will help you understand this guide as we continue on:
- Bank: A for-profit business where people can deposit and withdraw their cash as well as borrow.
- FDIC: An independent federal agency that insures deposits in U.S. banks and adds security in the event of bank failures.
- Bank account: An agreement where a financial institution accepts an account owner’s financial assets and holds them on behalf of the customer.
- Interest rate: In borrowing, it refers to the amount a lender charges and is usually a percentage of the amount loaned. In savings accounts, the interest rate is the amount earned on deposits held at a bank.
A key component of continuing down the road to understanding personal finance is setting financial goals. These targets can change over time and should shift depending on where you are in your life. Do you want to increase your savings? Do you have dreams of planning a major vacation or buying a big-ticket item like a house or a car? Regardless of your goals, we are here to help you plan how you can achieve them.
Opening a banking account
The first step to increasing your banking skills is to open the right kind of account for your needs. As is the case with most things, talk to your banker to find out what the ideal choice for you is. But before going in for advice, it’s a good idea to have a basic understanding of your options. Here are a few different bank accounts and their purposes:
Checking account
These types of accounts are made for customers to easily spend money, whether at a retail store or to pay bills. Because of this, checking accounts come with a debit card, not to be confused with a credit card, and can typically be accessed online through a desktop or mobile banking. All of these options to access your account are meant to make sending, spending and transferring money easier.
At Bank Midwest, you can choose from a number of different checking accounts, each one tailored to your personal needs. If you know what you need, you can even open the account online.
Learn more about the benefits of a checking account.
Savings account
As the name suggests, savings accounts are designed for saving purposes. They have interest rates that can help your money grow the longer you leave it in the account. There are also usually restrictions on the number of withdrawals you can make in a given time period.
According to the financial news outlet SpendMenot, 69% of adult Americans have less than $1,000 in a savings account. By creating savings goals, you can develop a savings plan using the right type of accounts to meet your goals.
Certificates of deposit
Certificates of Deposit or CDs have an interest rate premium that is applied to the money in the account, so long as the owner leaves the deposit there without any withdrawals for a certain period of time. There are fines and penalties if the money is withdrawn, which encourages savings and allows interest to build.
Depending on your dreams or financial goals, you can find the best bank account for your needs. Asking the right questions can help set you up for success. Here are five questions to ask a banker before setting up a bank account.
- What is the interest rate?
- What are the fines and penalties associated and how do I avoid them?
- What is an ATM fee and are there overdraft fees?
- Does the account have a minimum balance requirement?
- What are my mobile banking options?
Don’t take your account for granted. Review the features of your accounts at least once a year. If you want to see if there’s a better choice, compare accounts.
Curious about managing or accessing funds in your accounts? Let’s learn more about options win the digital space.
The ease of digital banking
Digital banking empowers you to manage your accounts by completing or scheduling transactions securely over the internet using a computer or mobile device, turning a physical bank into an online bank. You can pay bills, transfer money, deposit checks and keep track of your transactions, all from your computer or mobile device. Digital banking allows you to remotely manage your money from anywhere which can increase the hands-on experience.
With Bank Midwest’s digital banking solution you can:
- Make a mobile deposit and manage your direct deposit.
- Manage your debit card.
- Pay people or companies.
- Check your account balance.
- Take advantage of many other mobile options.
Online and mobile banking are secure because the online account is password protected and multi-factor authentication is required when new devices are trying to access accounts.
Transaction and security alerts also give you peace of mind. Turn on the alerts important to you be notified by email or text message.
The best questions to ask your banker
Your banker is one of the best resources in your financial education journey. They are professionals who have industry knowledge and experience as well as up-to-date information about the current market. As a customer of a bank, you should feel free to ask questions regarding your situation. Here are some of the best questions to ask your banker.
- How can banking help my credit score?
- Do I have to pay for replacement debit cards?
- What are my check options?
- How can I maximize my interest rate?
- What fees should I keep an eye out for?
- Do you offer overdraft protection?
This overview is meant to help you feel comfortable working with and more effectively use community bank services. Your financial institution offers more options than you may know and, with a little communication and curiosity, you can get the most out of your personal banking experience.
Reach out to Bank Midwest today to get started!