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So you’ve decided to open a bank account. Great! This will help make managing your money more secure and simple, rather than trying to keep track of cash or preloaded cards. However, knowing which account is best for you and your situation can be difficult to determine at times. Even before you choose a bank to open an account at you must ask yourself whether you want a savings account or a checking account. Should you try to open both? Which one would best fit your needs?READ MORE: Testing For COVID Ramping Up Again In Colorado
Both a checking account and a savings account will give you the protection guaranteed by the FDIC (Federal Deposit Insurance Corporation) which means all the money in your account up to $250,000 will be insured by the government in the event of a financial crisis. They will each allow you to deposit funds with the banking institution for later use, though how you intend to access your money will help you determine whether you need a checking account or a savings account.
Checking accounts are intended for use by people who will be spending their money regularly and will need easy, quick access to their funds for needs such as paying bills and transferring funds to and from other accounts. Many employers now also encourage their employees to have checking accounts for direct deposit purposes instead of having to rely on paper checks at payday. This is easier for the company to run their payroll and also means that you won’t have to take a trip to get your check cashed each time you’re paid.
Savings AccountsREAD MORE: Vaccination Rate Keeps Colorado Hospitals Out of Jeopardy
Savings accounts are intended for more long term storage of your money. They are designed to help you earn interest on the money you’ve deposited with the institution, and as such are designed for you to keep the money in the account until you’re ready to make a large purchase (such as a car or college tuition) or an emergency comes up. It can often take longer to transfer money out of a savings account than a checking account because of this. If your intent is to save your money until you need it, you should go with a savings account, as it can sometimes be too easy to overspend out of a checking account since you have instant access to your money.
Look For Additional Fees
When you’re choosing between the accounts, you’ll also want to check and see what kinds of fees and other costs may accompany an account. Generally, checking accounts will have higher or more frequent fees due to the extra work that goes into supporting the ability for you to access your money at any time. Often, you can get a savings account with no regular maintenance fee attached if you agree to keep a minimum balance in the account. However, savings accounts can have higher fees for withdrawing money from ATMs and through online services.
Whichever you choose, you should make sure that your choice best reflects your financial needs and goals — and shop around between different financial institutions in your area. Read through your agreements before you sign up for the account so you aren’t met with any surprises later!
Gillian Kruse is a freelance writer living in Houston. She graduated from Rice University with a great love for all performing and visual arts. She enjoys writing about arts and cultural events, especially little-known ones, to help Houstonians learn about what’s going on in their city. Her work can be found at Examiner.com.MORE NEWS: Gov. Jared Polis To Request Federal Disaster Declaration For I-70 Mudslide Damage Through Glenwood Canyon