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Reflect on Learning: What would you consider an “emergency” worthy of digging into your precious savings account? How you use the concept of needs vs. wants to provide savings account discipline? Have you ever had an unexpected expense and not had enough money saved to pay for it? In a later chapter you will learn more about the purpose and use of a savings account. Checking Account Daily Use Account. A checking account is a deposit account used for funding daily purchase transactions , like buying groceries or gas, or paying the utility bill. Although the digital age has nearly killed off paper checks (less than 10% of U.S. purchases are paid by check), they are still
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Oh, What a Waste! There is an estimated $41.7 billion, at least, of unclaimed money in savings accounts at banks and other financial institutions across the U.S. Source: National Association of Unclaimed Property Administrators
called checking accounts. For most people, this is their go-to account for depositing their paycheck and paying their daily expenses like food, rent, shopping, etc. Banks anticipate that funds will be coming into and going out of a checking account. Checking accounts are not tools for saving money. Banks rarely pay interest on checking accounts. In fact, most banks charge the account holder a fee for maintaining the account at the bank. Account Management Tools. A checking account comes with lots of account management tools . One such tool is the debit card which takes the place of writing checks, paying with cash, or using a credit card. When you use a debit card to pay for something, the money comes directly out of your checking account . A debit card also provides cash access to the account funds via the Automated Teller Machine (ATM). Account PRODUCT PREVIEW holders can use their checking account management tools to pay bills online, instantly transfer funds, track spending, and check the account balance. Balances are automatically updated whenever a purchase, debit, or deposit is made. Most banks also have a mobile banking app that enables many transactions — even depositing checks — to be done on a mobile device. Bank Statement. Every month your bank provides you with a bank statement showing all of the transactions in your checking account for the prior month. It tells you where you paid with your debit card and how much you spent. It also shows where you used the ATM, how much you withdrew, and what fees you paid. Your statement will tell you who you wrote a check to and for how much. Review your bank statement carefully each month because it helps you keep track of spending so you know where your money goes. Money Market Account A money market account (MMA) refers to a kind-of hybrid savings and checking account . In reality, it is a savings account which earns a slightly higher interest rate than the standard savings account rate. The trade off for a higher rate is that the account holder can make only about six withdrawals from the account each month . Also there is often a high minimum balance requirement. To open a bank account, you’ll need a photo I.D. like a passport or driver’s license and a Social Security number plus a minimum deposit of $25–$50. A non-U.S. citizen may open an account with an American bank with foreign passport or alien identification card and a TIN (taxpayer identification number) from the Internal Revenue Service.
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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