I confused with two different bank accounts....HELP !!?

Question

ok....so i'm about to turn 18 yrs. old in about 2 months and i've been thinking about starting up a bank account. My concern is that i really don't know what type of bank account i should open up. I have a job that pays me 6.15/hr. I don't know the differences between a checking account and a savings account. I want an account that i can easily withdraw money from whenever i need it the most. Can somebody please explain to me ?

Answer 1

To make it simple:

Checking account = you can write checks out to people and companies to pay your bills. You have to be careful here. If you withdraw more money than what it is in there, you are charged a bank fee and/or your checks will be bounced. For example, lets say you have only have $100 balance in the account and you write a check to a credit card company of $200. The company cashes the check in within 2 days and now you have a negative $100. You will be charged a bank fee for not properly balancing your account.

Savings account = no check writing option. You can only deposit and withdraw money at anytime, but you can't pay your bills since they only accept checks. Savings account has higher interest rates than checking accounts.

In both accounts, you can withdraw and deposit money at anytime.

Answer 2

If you are good at balancing a checkbook, a checking account would be fine. Your checkcard will have the visa or mastercard logo and can be used anywhere visa or mastercard is accepted. Be sure to deduct the amounts in your checkbook because the money will come out of your checking account. This will come in handy if you are just want to get $5 in gas and do not really need any extra cash. A savings account usually only allows a certain number of withdrawals for free and then the bank will charge you. If you have $18 in your savings account to last until payday you won't be able to make a withdrawal at most banks you have to withdraw in $20 increments. With the checking account you could still use you debit card for any amount as long as you have the funds. Bank of America is a good bank and has many locations throughout the U.S.

Answer 3

Consider a credit union and open both. They will typically have free checking accounts.

The checking account is used for paying bills and making frequent withdrawals and/or writing checks. There is usually no limit to the number of withdrawals you can make.

A savings account is typically opened for longer term savings of money. There is a federal regulation that will only allow 6 withdrawals per month (three in cash and three transfers to other accounts).

If you can, have you paycheck direct deposited to a checking account and get an ATM card. Through most credit unions, you should be able to make free withdrawals from your checking account.

Use the savings to start a budget and start saving some of that money you are earning. Even if you only put $5 or $10 from each paycheck, you will have a jump on most of your friends (I didn't start actually saving any money until I hit 22).

If you have any more questions, contact some financial institutions around you and talk to them about your options.

Good Luck.

Answer 4

Checking account is best for you and will be for a long time.

Savings account is a silly way banks have you open up a second account. They give you very little in return for what you allow them.

I make a lot of money and would never use a savings account...it is a bad placeto put my money. Bad in the sense that you're not using it well and the bank isn't doing anything for you... the best thing you can do is put your money in a money market...which requires you to have at least 2thousand dollars minimum...it will pay you better interest on your savings than the savings account will.

My biggest concern for you is, that you need a bank that won't charge you lots of fees...it's not fair to you based on the money you make. Can you believe some banks charge $50 per month...pay more attention to their fees...otherwise they will rip you off. Sometime directdeposit is the only way to waive them. Also -- you should consider using a bank that is big and has ATMs everywhere so you have easy access to your money (checking account). :)

Let's get you working making double or triple 6.15/hr. -- get you into some health care or tech college classes and get you going on a nice career. :)