Life in the USA
Types of Bank Accounts
Savings and checking are the two basic types of bank accounts. Banks require certain minimum balances for these accounts, otherwise they lose money just on the record-keeping. Savings accounts will have a passbook on which your deposits and interest are entered. You'll receive interest every so often, perhaps every month or quarter. The interest rate at savings banks is slightly higher than the rate at commercial banks.
Checking accounts allow you to write checks against your account, up to the available balance. If you don't have enough money in your account for a check you write, the check will “bounce” and the bank will return it unpaid to the person you wrote it to. You both will be charged an extra transaction fee. To bounce a check in America is considered an embarrassment. If you bounce a check you write to a merchant, they will probably charge you an extra fee themselves.
Fees. Checking accounts usually have fees per month and per check. In addition, you lose money because you do not earn interest on checking accounts. Many banks offer no-fee checking if you maintain a certain large balance in the account: $1,000 or so. This is a trick of sorts. The bank gets to use your $1,000 for free. If you had it in a savings account you'd earn interest on it. The checking, therefore, is anything but free.
Checking at Savings Banks. Savings banks also offer accounts which work like checking accounts, though they might be called something else, like a NOW (Negotiable Order of Withdrawal) account. Some savings banks offer these accounts with no fees, some pay interest, some do both. You'll have to shop around among the smaller banks to find these accounts.
To open a bank account, bring a few pieces of identification: driver's license, passport, social security card. You will have to wait to see a bank officer, who will be sitting at a desk, rather than waiting in line for the bank teller. If you don't understand any of the bank's procedures or rules, ask the officer to explain them to you. It is common sense to visit the bank when it is not crowded.
You'll use checks to pay for such items as rent, electric and telephone bills, insurance payments, mail-order goods, and so forth. You may also often pay by check when shopping in person. If the store doesn't know you, they will want identification, usually at least one major national credit card plus a driver's license.
Cash Back. It is not customary or polite to ask a merchant if you can write a check for more than the balance as a means to get ready cash, except, to a limited degree, in supermarkets. Supermarkets have special procedures for paying by check. You'll probably have to apply for a special check cashing card with the supermarket manager, and sometimes you'll have to get each check approved by the manager before you get in line with your purchases. The supermarket will have a limit ($25.00 or so) on how much cash you can get back above the amount of your purchase.
Next Section: Endorsements and Check Clearing
Personal Finance: Chapter Home
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