Bank Account Basics

What is a bank?

The bank will open an account for you so that you can have a place to put your money and keep it safe. Banks can also offer many other financial services (, including: defines a bank as, "A financial institution licensed as a receiver of deposits."

To explain this definition further states, "Commercial banks are mainly concerned with managing withdrawals and deposits as well as supplying short-term loans to individuals and small businesses. Consumers primarily use these banks for basic checking and savings accounts, certificates of deposit and sometimes for home mortgages...Convenience, interest rates and fees are the driving factors in consumers' decisions of which bank to do business with."

What is a credit union?

A credit union is another place where you can put your money to keep it safe in an account. To use a credit union you generally have to meet the requirements of the credit union to join - usually based on groups that include the community you live in, your employer or religious institution.

Credit unions offer many of the same financial services as a bank and sometimes a few extra perks like community paper shredding days, accounts for wedding gifts to be deposited to and free coin counting machines. ( defines a credit union as, "Member-owned financial co-operative. These institutions are created and operated by its members and profits are shared amongst the owners."

To explain this definition further states, "As soon as you deposit funds into a credit union account, you become a partial owner and participate in the union's profitability. Credit unions are formed by large corporations and organizations for their employees and members."

How to Choose Between a Bank and a Credit Union

There are a few factors that you should consider for yourself when deciding between a bank and a credit union. (

  • Make a list of what you are looking for in a bank. This could include convenience of ATMs or locations, fees, minimum balance requirements and the interest rates offered on their checking and savings accounts.

  • Take a look at the banks and credit unions that you pass on a regular basis (going to work, school, near your home, etc.)

  • Check out the checking and savings account offers that each of the banks you select to visit may have. This would include interest rates on their savings accounts and varying levels of required balances in a checking account before incurring fees.

  • Ask about the fees that are charged on their checking and saving accounts.

Once you have gathered this information make a "pro" and "con" checklist for each of the banks you visited, and this will help you see what each of the banks offer and which bank most closely matches the benefits that you listed at the beginning of your research.

Once you have determined which bank or credit union best meets your need, you can go to that location and let a teller know that you would like to open an account. Some banks and credit unions even have an online process to open account for even more ease and convenience.

How to Use Your Bank Account

Making Deposits into Your Bank Account

Making a "deposit" is how you put cash or checks into your bank account(s) whether they are checking or savings accounts ( To do this you can:

  • Go to your bank or credit union's physical location.

  • Use your bank or credit union's ATM.

  • Use "direct deposit" with your employer or government benefit agency where they directly deposit the funds into your bank account for you without cutting you a paper check or giving you cash.

  • Some bank branches now have mobile phone applications where you can deposit checks into your bank account by taking pictures of the check and submitting them through that bank's mobile phone application. This is usually referred to as a "mobile deposit."

Making Withdrawals from Your Bank Account

To take money out of your bank account you will "withdraw" the funds from the account through one of the following methods (

  • Go to your bank or credit union's physical location and make a withdrawal from a teller.

  • Use your bank or credit union's ATM.

  • Use your debit card while shopping and choose the "cash back" option if it is available.

  • Writing a check to someone will withdraw the amount drawn on the check out of your bank account.

  • Wiring money to someone will withdraw the amount requested out of your bank account.

Does my bank account have fees?

All banks and credit unions have a schedule of fees that they charge for certain services that they provide. These should be presented to you when you open your account(s). Some of the things that banks and credit unions usually charge fees for include (

  • going below the minimum balance on your account type - the minimum balance is the amount of money that the bank has required you to keep in your account to avoid paying fees
  • spending more money than is in your bank account - also known as "overdrawing" your account.
  • using another bank's ATM to withdraw money - usually incurring a fee at your bank and also from the bank whose ATM you used

Many checking accounts now offer no minimum balances if a direct deposit is made to the account at least once a month. Ask your employer if they offer direct depositing of paychecks so that you can take advantage of this money saver (it will also help to save a few trees too). (

How to Avoid Fees on Your Bank Account

There are a few easy ways to avoid paying the fees that are most often charged on a bank account ( Some of these include:

  • Don't go below the minimum balance on your account type. Make sure that any debit card purchases, cash withdrawals or outstanding checks will not drop you below your minimum balance.

  • Don't spend more money than is in your bank account.

  • Use YOUR own bank's ATM to withdraw money. Going to another bank's ATM usually incurs fees.

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