Opening a checking and savings account at a bank or credit union will allow you to secure your earnings and benefits. Your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) against bank failure so your money is much safer than it is under your pillow or even in your wallet!
Having a checking account allows you not only to pay for goods and services with personal checks but also to pay with debit cards linked to your checking account. Having a savings account allows you to save for a rainy day, for gifts, purchases and other things on your wish list, and linking your savings and checking accounts is one way to provide overdraft protection.
Choosing a financial institution is a matter of convenience (how close branches are to where you live and work, hours,where you can access ATM machines without fees) and also services (does your institution offer free checking, passbook accounts and other services, how much do they charge for overdraft fees and what is the procedure for waiving them etc.).
Banks and credit unions provide the following services that are useful to customers:
- Issuing money orders for businesses that will not accept personal checks or debit cards
- Issuing personal loans
- Providing advice on financial matters (e.g. retirement, investments)
- Providing statements and transaction records
- Providing online banking services
Want more information on how to open a banking account? CLICK HERE.
Additional Banking Information
Second Chance Accounts
Those with bad credit or chronic overdraft histories who wish to open accounts at a bank and credit union may find themselves unable to do so. However, some institutions offer Second Chance accounts.
Second-chance checking accounts are designed to help you develop a better checking record. They usually have a monthly fee of somewhere between $5 and $10 and offer a short list of features like check-writing, a debit card, and online banking. They don't include premium features like free checks, debit rewards programs, or overdraft protection.
Basically, it's never the best checking account that a bank or credit union offers, but if you open a second-chance account and keep a good record, the financial institution usually allows you to "upgrade" to a different checking account within 6-12 months. Click here to use our Bank Comparison Tool to see which banks in New Haven offer Second Chance accounts.
Overdrafts and Overdraft Protection
An overdraft is an extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it or not enough to cover the withdrawal. Basically, overdraft means that the bank allows customers to borrow a set amount of money.
Other Special Accounts
Passbook account: A Passbook Savings account lets you earn a competitive rate of interest on your entire balance and provides a passbook for easy record keeping. With a Passbook Savings account, you typically MUST visit your local branch (with your passbook) for all deposits and withdrawals.
Joint accounts: A joint account is a bank account held by more than one person, each individual having the right to deposit and withdraw funds.
Accounts requiring co-signatories: Authorized signers have no rights to the checking account other than those granted by the account's owner or financial institution. Typically, authorized signers can sign checks and withdraw or deposit funds without having to ask the owner for permission.
Helpful Definitions
- Credit Union: Credit unions are member-owned, not-for-profit financial cooperatives that provide savings, credit and other financial services.
- Federal Deposit Insurance Corporation (FDIC): The U.S. corporation insuring deposits in the United States against bank failure.
- Checking Account: A bank account, which pays little or no interest, from which the owner can withdraw money by writing checks, using an ATM machine, or electronic debit.
- Debit Card: A plastic payment card that can be used in place of cash when making purchases.
- Savings Account: An account provided by a bank for individuals to save money and earn interest on the cash held in the account.
- Overdraft Protection: A line of credit banks offer their customers to cover checks written or debit card purchases made that are more than the money available in their account.
- Branch: A semi-independent office of a bank.
- ATM Machine: (Automatic Teller Machine) An electronic banking machine that accepts deposits and dispenses cash by inserting a debit or credit card.
- Overdraft Fee: A fee charged when a withdrawal from an individual's account exceeds the amount of money in the account.
- Money Order: A written order (certificate) to pay a certain amount of money to a specified person or company. Money orders function like checks and are often used by individuals without checking accounts.