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Introduction |
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Top 10 things |
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The details: |
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Pick the right account |
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Take an interest in interest |
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Beating fees |
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Online banking |
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Bank alternatives |
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Savings growth  |
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Glossary |
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Take the test |
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Lessons:
About Money
101
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IntroductionHere's how to get the best banking services at the best price, either online or off.
It used to be that Americans put most of their money in the bank and left it to accrue interest in their savings accounts. Not anymore. Today, we put more than 70 percent of our wealth in stocks, mutual funds, tax-deferred retirement accounts and other managed assets. But the vast majority of us still use banks for our immediate checking and savings needs, and some of us still leave a high percentage of our money in low-interest-bearing bank accounts.
Of course, we can use banks for much more than our checking and savings. Getting loans, for one -- making loans is what earns banks their bread and butter. But banks also offer a wide range of financial services, including mutual funds, retirement accounts, credit cards and insurance products. But since we cover these arenas in other chapters of Money 101, we will spend this lesson looking at your bank's traditional role as a convenient, safe place to store cash temporarily.
Banks are convenient because you can tap your account at an ATM any hour of the day or night. And they're safe because bank deposits are insured up to $100,000 by the U.S. federal government under the auspices of the Federal Deposit Insurance Corporation (FDIC).
In practice, however, your accounts can be insured for more than that since different types of deposit accounts are insured separately. Jointly owned accounts are insured separately from individually owned accounts; checking accounts are insured separately from certificates of deposit (CD); and retirement accounts such as IRAs may be insured if your IRA money is invested in deposit accounts such as CDs or the money market. So if you have a joint savings account with your spouse, and each of you has your own checking account and CD, each of the five accounts would be insured up to $100,000, giving you up to $500,000 of protection. (However, if you alone have a checking account worth $60,000 and a savings account worth $70,000, you'll only be insured for $100,000.)
Of course, the convenience and safety of banks comes at a price. For people who don't meet monthly minimum balance requirements the average cost of maintaining a regular checking account is $228, according to a November 2001 survey from the Public Interest Research Group (PIRG). The larger your bank, the more you're likely to pay - the average yearly fee is $266 at big banks but only $191 at small banks.
But how much you pay depends on a number of factors, including the types of services you need and how well you shop around.
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