Learning more about the banking system is a key step in understanding personal finances.

Research your local banks and credit unions. Find out what features banks offer for savings and checking accounts. Note how much in overdraft fees the bank will charge if you don’t have enough money in your account to cover your purchase, ATM withdrawal or debit charge. Banks can require you to have a fixed balance or earn interest on deposit to waive any account fees.

Fees can add up quickly, so choosing your bank and the type of account can make a difference.

Consider your needs when choosing how you’re going to handle your money. Every choice has different rules and benefits, so pick the one that’s best for you. If your first choice doesn’t work out, you can bank elsewhere.

How to open an account

Some banks will do a full credit report to see if you’re a good risk for them to add you as a customer. They’ll take your identification (typically a driver’s license) and your Social Security number to verify your information. Once they determine you’re eligible, you can deposit money into your new account. Sign up or enroll in your bank’s online program so you can check your balance, pay bills and manage your money electronically.

Most savings accounts don’t earn much interest. To keep pace with inflation, you’ll want to put some savings into certificates of deposits, savings bonds or Treasury bills to earn a higher return. But that’s after you have a chunk of savings you can afford to put away for at least six months. Until then, stash away as much as you can and don’t spend it unless you absolutely have to. Remember, pay yourself first. You’ve earned it.


Checking (or debit) accounts let you use a debit card to withdraw money you’ve deposited. The bank pays the person or business and sends you a monthly list of deposits and withdrawals called a bank statement. As you use your debit card or take money out of an ATM, make a note of the amount. Also, write down the dates and amounts of deposits and bank fees so you can keep track of your balance.

Security issues

Never provide bank, credit card or other sensitive data when visiting a website that doesn’t explain how your personal information would be protected, including its use of encryption to safely transmit and store data. Make sure the website is secure by looking at the browser address. If it has “https” in front of it or a small padlock symbol at the bottom of the page, it’s probably secure.

Install a free or low-cost firewall to stop intruders from gaining remote access to your PC. Download and frequently update security patches offered by your operating system and software vendors to correct weaknesses that a hacker might exploit.

Con artists often pose as charities or business people offering jobs, rewards or other opportunities. They hope that trusting souls will send cash or checks, provide SSNs or credit card numbers or wire money from a bank account. 


Monitor your spending carefully. Know your general bank balance each time you make a transaction, because if you try to debit money that isn’t there, your card will deny you the purchase.

Balancing your account lets you keep an eye on your money and the fees your bank is charging. Sometimes, you can even spot a rare error. Most banks have a time limit on disputing errors on your account, so the sooner it’s spotted, the sooner you can take care of it.

When you see your bank statement, make sure all your debit transactions and deposits are shown. With a calculator, double-check your register to make sure all your deposits are recorded. Also, if you earned any interest on your deposits, record that.

Then, double-check your spending transactions, including fees. Add the deposits and interest to the beginning balance, then subtract all the debits to get a balance. Compare that to the ending balance on your statement to make sure they match.

Now, note any debits not listed because the bank hasn’t received them yet and list them in a column. Add them up, and subtract that number from the ending balance on your statement. If you’ve made deposits that aren’t shown on your statement, add them to your worksheet. Subtract your total outstanding debits, and the figure you get is your current balance.

Debit and ATM cards

Debit and ATM (automatic teller machine) cards are tied to your checking account, so when you make a purchase or withdraw funds, the money is automatically deducted. There is no grace period. Some banks provide different debit and ATM cards. Some issue one card that you can use as both.

They’re good in that you can’t spend what you don’t have in the bank. However, your bank may “loan” you the money if you don’t have enough in your account. You have to give the bank permission to provide overdraft protection, and it will charge you. Consider that option carefully.

If you use your debit card, the business may put a hold for the amount on your account, which means the money isn’t available for other purchases. A hold can take up to a week to clear your bank, so be prepared.

There may also be charges if you use a PIN, rather than signing for it like a credit card. Note: if you sign for a debit purchase like a credit card instead of a PIN, it gives you zero liability protection, which means you have no rights if the product is defective and you want your money back.

Federal law does not give you the right to stop payment on a problem purchase. Instead, you must resolve the problem with the seller. These protections are less than those for credit cards.

If you have a lost or stolen card, call the issuing bank IMMEDIATELY. Your liability for unauthorized use can be much higher if you don’t report it right away. If you report a debit or ATM card missing or stolen BEFORE it’s used, you may not be responsible for unauthorized withdrawals.

If you dispute a purchase, the seller already has your money. It will only be returned if you win the dispute.