Financial Literacy for Students: Banking

Checking Account

• A bank account that lets you deposit, withdraw, and transfer money
• An important part of paying bills, budgeting, and saving
• Typically comes with a debit card for making purchases
• Don't usually earn any interest
• May have associated fees, check with your financial institution

Savings Account

• Generally flexible accounts for saving your money
• Earns interest, generally around .25% depending on the current market
• Does not come with a debit card, but sometimes you can access a savings account connected to a checking account with your debit card
• May have minimum balance or other fees associated, check with your financial institution

• HYSA (High Yield Savings Account)
  • A high yield savings account is a special type of savings that provides a higher rate of return on funds kept in the account. For example, a regular savings may earn 0.01% interest, and a HYSA may earn 3% or more
• Money Market Savings
  • A Money Market account is a savings account that typically provides a higher rate than a typical savings account. There are often minimum balance requirements 
• CDs (Certificates of Deposit)
  • A CD is a type of savings account that provides a higher interest rate than a regular savings, but freezes the funds, so they are unavailable for a set amount of time that you can decide (anywhere from 3-months to 48-months or more). There may be penalties (fees) associated with early withdrawals
• Special Purpose Savings
  • Some institutions will allow you to have multiple savings accounts, they may be called shares, or vaults, or some other name. These accounts allow you to set aside funds for a specific purpose of your choosing, like a vacation fund. There is typically no fee to transfer to or from these accounts, but check with your institution
• HSA (Health Savings Account)
  • A savings account where funds are set aside for medical purposes

These are just some of the more common fees that you could be charged. Check with your Financial Institution for their Fee Schedule (this is something they are required to provide to you at time of account opening)

• Overdraft Fee (often $25+)
  • Charged when you spend money in your account that you don't have
    • The financial institution "covers the cost" for you, but charges you for it
  • How to Avoid: Be sure you have adequate funds in your account before attempting a purchase, or see if you can opt-out of this coverage. Opting out will decline a purchase rather than covering it
• Insufficient Funds Fee (often $25+) 
  • Charged when you spend money in your account that you don't have
  • Can also be charged if an electronic transaction attempts to come out of your account and is rejected due to unavailable funds
  • How to Avoid: Be sure you have adequate funds in your account before attempting a transaction. It is important to remember to keep an eye on any auto-withdrawal transactions you may have set up
• Transfer Fee (often $5+)
  • Charged when your financial institution moves money from another account (often savings) to cover a charge coming out of checking
  • Some financial institutions will allow a certain number of these transfers before starting to charge the fee, check with yours
  • How to Avoid: Be sure you have adequate funds in your account before attempting a transaction. If you don't, make the transfer yourself before making your purchase
• New Card Fee (often $15+)
  • Charged when a replacement card is needed, if you loose or damage yours
  • May be waived if the card is replaced due to fraud, ask your financial institution
  • How to Avoid: Try not to lose or damage your card
• Minimum Balance Fee (often $5+)
  • Charged when your account balance drops below a certain threshold
  • Check with your financial institution to see if there are minimum balance requirements
  • How to Avoid: Keep your account above the minimum funds requirement, or choose a financial institution that does not charge this fee
• ATM Fee (often $3+)
  • Typically charged when using an out of network ATM 
  • How to Avoid: Check with your financial institution about which ATM's to use to avoid this fee
    • There is often a feature in Mobile Banking Apps to help with this as well
• Dormancy Fee (often $5+)
  • Charged when an account has had no activity for a set amount of time, usually 6 or 12 months, check with your institution
  • How to Avoid: Be sure to make a transaction every so often within the time frame your institution sets