types of bank accounts
CHECKING
Bank deposit account designed for everyday monetary transactions. Often come with debit cards that can be used to withdraw money from ATMs and to pay for in-store or online transactions. Debit cards only allow the user to spend amount of money available in their checking account. Spending more can result in overdraft fees, the average fee being around $34. |
SAVINGS
Bank account for money that is intended to be saved, typically earning interest over time. There is normally a limit to how much you can withdraw from your savings at a time, rarely are you allowed to withdraw all of it at once. Typically you are allowed to withdraw from the account up to 6 times per month, but that will vary depending on your bank. |
checks and checkbooks
Checks are slips of paper that are linked to your checking account. Checks are found in a checkbook. They are a slower way to transfer money from one account to another, NerdWallet calls them "slow-motion debit cards."
Many landlords require rent and other expenses to paid via check, so they can still be very useful.
Many landlords require rent and other expenses to paid via check, so they can still be very useful.
how to balance a checkbook
Balancing a checkbook is not necessarily a skill that is used as much today as it used to be but it is still important to know because some people may only accept checks as a form of payment or during certain circumstances it could be much more convenient to write a check.
The picture above is an example of a check register where you record all your transactions. Write down any debits (money being taken out- withdrawals) and credits (money being added- deposits) to your account. Place the corresponding amount and the check number with the date. Add your transactions as they happen and recalculate your balance regularly so you are always on top of how much money you have and where your money is going.
Banks can make mistakes so it is important that you are always checking and double checking making sure you recognize any discrepancies so that you can get it fixed.
Banks can make mistakes so it is important that you are always checking and double checking making sure you recognize any discrepancies so that you can get it fixed.
key terms
DEBIT CARD - a card connected directly to your checking account; do not let the user spend more than how much is in their account, overdrafting results in high fees that can be easily avoided if you track how much money you are spending
INTEREST - charge for privilege of borrowing money. A savings account interest is the payment you receive from the bank, it is a percentage of the amount of money stored in your savings account. They pay you this for keeping your money deposited at the bank. You can also have to pay interest if you take out a loan from the bank, because just like they pay you for keeping your money, you must pay them if you borrow their money.
INTEREST - charge for privilege of borrowing money. A savings account interest is the payment you receive from the bank, it is a percentage of the amount of money stored in your savings account. They pay you this for keeping your money deposited at the bank. You can also have to pay interest if you take out a loan from the bank, because just like they pay you for keeping your money, you must pay them if you borrow their money.