FDIC Insurance protects your money. Most bank
accounts are protected under Federal Deposit Insurance Corporation (FDIC),
meaning if the bank were to fail, the money you deposited - usually up to
$250,000
- will be returned to you safely.
Compound interest will help your money grow.
Compound interest is interest earned for a specified time period that is
added to the balance to earn additional interest the following period.
However, banks do charge fees if you're unable to manage your money
well. Below are four common fees and how you can avoid them.
Monthly Maintenance Charges Most
checking accounts will allow you to avoid monthly maintenance charges if you
receive direct deposit of your paycheck or keep a minimum balance in the account
- typically $25 - $100. If you don't have direct deposit, you need to
ensure you have sufficient funds in the account to avoid maintenance charges,
which are generally $3-4 per month.
Overdraft or Insufficient Fund Fees As
soon as you write a check, subtract that amount from your balance, even though
it may take weeks for some individuals and businesses to cash your check.
By immediately subtracting the check from your balance, you are less likely to
overdraft or bounce a check, which results from having insufficient funds in
your account. Similarly, when you use your debit card at a store,
restaurant or other business, record the debit the same way you would a
check. Often, these purchases do not draw from your account for several
days.
Overdraft or insufficient fund fees range from $25-$35 per transaction,
depending on the institution. Some institutions offer overdraft protection
plans, which will transfer funds from your savings or a line of credit if you
have insufficient funds in your checking account. There will be finance
charges associated with the line of credit and you may incur a usage charge
(typically $10) for drawing on your savings or credit.
Foreign ATM Fees If you use ATMs other
than those operated by your bank (foreign ATMs), you will generally be charged a
fee by the ATM provider (typically $1.50-$2.00) and your financial institution
(typically $1.50-$3.00). Most financial institutions will charge your
account once a month for all of your foreign ATM transactions, so you should
also track how many times you visit ATMs outside of your bank network to
anticipate the fees you will be charged.
Transaction Fees Some checking
accounts limit the number of times per month you can withdraw from the ATM, use
your debit card or write checks. If you exceed those limits, you will be
charged (typically $1.00-$2.00) for each of these transactions.
A bank account
offers many benefits:
