You’ve probably heard of people who’ve hoarded cash under their mattress or have it stashed away in secret hiding places. Unless you’re a pirate looking for buried treasure, this isn’t a good thing. Why? Cash can get lost, stolen, and you don’t earn any interest. That’s why you need checking and savings accounts.
A checking account is your main money hub where the money you make gets deposited and your bills get paid. You get a debit card that is connected to the account and can spend money with ease, and without any debt like a credit card (though there is a bit more risk when it comes to fraud as it’s harder to dispute). Consider your checking account your spending account.
On the other hand, your savings account is your stash-your-cash-away-for-later account. Savings accounts can be used for anything you want but are especially good for building an emergency fund. To up your financial game, set automatic transfers from your checking to your savings account to make saving easy. That way you don’t have to think about it at all, just make sure you have enough in your account so you avoid annoying overdraft fees.
No fees, please
When looking for a good checking and savings account, the first thing you want to scope out are fees. Some traditional banks have monthly maintenance fees if you don’t keep a certain amount of money in your account, which is basically punishing you for being broke (no thanks).
They’ll also try to get you with overdraft fees, which are the banking version of a parking ticket letting you know that you spent more than what is actually in your account. You can typically avoid fees altogether if you opt for an online bank such as Ally or Capital One.
Make it interesting
Next, you want to look at the account’s interest rate, typically referred to as the Annual Percentage Yield (APY) in this context. When you deposit money in your checking and savings account you can earn a little coin back in interest as a thank you from the bank for letting them use your money.
But not all APYs are created equal. So you want to review what the APY is for checking and savings and compare rates among banks. Remember, the higher, the better. Keep a look out for the term “high yield” when it comes to savings accounts. High yield savings accounts offer better interest rates than old school savings accounts. Though tbh, rates aren’t great anywhere right now (thanks, pandemic).
Last thing: don’t forget to make sure your bank fits with your lifestyle. You want a mobile app that is easy to use so you can make deposits from anywhere. If local branches and ATMs are important to you, consider that when choosing a bank.
Essentially, you want a bank with low to no fees, a good APY, a mobile app to use, and solid customer service. You can check out online reviews before you open an account. Your accounts house your money. So make sure the accounts can help you get your financial life together.