Is it safe to put my money in a bank?
Some people are concerned because of the recent number of bank failures, banks in trouble, and banks being bought. It is still safe to keep your money in a bank. The federal government insured individual deposits in a bank up to $100,000 per person per bank until October 3, 2008, when the limit was raised to $250,000. This will continue at least until December 31, 2009. If you have a joint account, half of the amount is assigned to you, and half to the other person. There are separate rules for retirement accounts and trusts. If something happens and the bank fails, insured deposits will be safe. You will be able to take your money out.
What kinds of bank accounts are there?
There are many kinds of bank accounts. The most common ones are checking accounts, savings accounts, and certificates of deposit (CDs). Checking accounts let you write checks to pay bills and send people money. You can also pay bills online or use a debit card. Some checking accounts require a minimum balance or a regular automatic deposit of a paycheck or social security check. Some of them pay interest, although sometimes at a very low rate. You have to check the rules for each kind of account, and make sure there is no per check charge. Some market money checking accounts give higher interest, but limit free checks to three per month.
With a checking account, it's important to record all your deposits and withdrawals, whether at the bank or at an ATM or using online banking, so you know how much you have available. If you write a check for more money than you have in your account, you may bounce a check and there could be a fee.
Regular savings accounts give some interest on your money and let you withdraw money at any time. They sometimes require a minimum balance.
Once you have a bank account, you can cash checks with no fees. Sometimes the bank won't let you get the money right away because they have to make sure the check won't bounce and the money will be deposited into your account.
In general, certificates of deposit guarantee an interest rate for a certain amount of time. However, you can't close the account early or withdraw money or there is a penalty. You have to check with the bank to find out all the rules for each kind of account because the banks have different plans.
What is online banking?
Nowadays, you can use the Internet to do some banking on your computer. First you need an e-mail account. Then you have to register on the bank's website. You will need a user name and a password. For online banking, it's very important to choose a password that would be difficult to guess. For example, you wouldn't want to use your birthday or your phone number. A combination of numbers, letters, or symbols is best. Some banks add protection and require you to have a special security question, or some other secure method.
With online banking you can check to see how much money is in your account, if a deposit went through, or if a check was cashed. You can transfer money between your accounts in the same bank, or have the bank pay some bills.
How can you pay bills online?
As computers are becoming more and more common, more and more people are paying their bills online. Some banks have online banking arrangements that you can use to pay bills. Most utilities now allow you to pay online as well. You can pay the water, cable, telephone, gas and electric bills online. In California, you can also pay your vehicle registration online. Some insurance companies let you pay online too. You can use a credit card or you can pay directly out of your bank account.
If you want to pay a bill using a checking account, you need to know the bank routing number and your account number. Look at the check below.
The bank routing number is nine numbers, appearing between : and : on the left side. This routing number is 121000358. The check number appears either on the left or the right of the account number. Here the check number is on the left. The account number is 0272707119. With the routing number and the account number, the bank can transfer money from your account to a company without a check.
What's the difference between a credit card and a debit card?
A debit card is connected to a bank account. When you use a debit card, the amount of your purchase is subtracted from your account. When you use a credit card, you are borrowing money from the bank that gave you the card. The merchant pays the bank a fee for either service.
If you use a credit card, you receive a bill once a month for all the purchases you made. If you pay your credit card in full and on time every month, the bank will not charge you a fee. If, however, you buy more than you can pay for at the end of the month, the bank may charge a very high interest fee. It is often more than 20%. Not only that, but the bank will keep calculating the high percentage if you buy more things even if you pay off the bill the next month. There is usually a minimum balance you have to pay, but if you just pay the minimum, you will still have to pay a high interest rate. If you don't pay the minimum, or if your payment is late, you will have to pay a fee.
If someone steals and uses your credit card, you need to report it to the credit card company as soon as you find out. The law says you are only liable for fifty dollars of any charges. If you use a credit card and there is something wrong with your purchase, you can often get your money back. People sometimes use credit cards that can be used to get free airline trips or that donate money to organizations or give refunds at the end of the year depending on how much you spend.
There are different kinds of debit cards. One kind is like an ATM card. You need to have a PIN number (a secret password number) to be able to use it. Other debit cards are signature cards. You only have to sign your name to use them.
If your debit card is used by unauthorized people, you have to tell the bank within two days to keep your liability to $50. If you tell them after two days but within sixty days, your liability is limited to $500. After sixty days, you may lose everything. Sometimes the debit doesn't clear right away so you have to be careful to know how much money is in your account so you don't overdraw the account and have to pay a fee.
What does a credit bureau do?
A credit bureau is a company that keeps track of your credit. They have information about what credit cards and loans you have, if you pay them on time, your employment history, your credit history, if you have tax problems, bankruptcies, etc., and who's been asking to see your credit history. There is also a FICO score (created by the Fair Isaac Company) that shows how responsible you are about taking care of your money and therefore how likely it is that you will make loan payments on time. If you ever want to get a mortgage or borrow money to buy a car, for example, a higher score might get you a better rate.
The three major credit bureaus are Experian, Equifax, and TransUnion. In California, if you are refused credit for something, you can request a free copy of your credit report within sixty days of the refusal. In addition, everyone in the United States is able to get one free credit report a year from each of the three companies. The official website to order a credit report online is annualcreditreport.com. Sometimes you can print it right then, and sometimes they can't get it for you and you have to do it by letter. You can also ask for your report by phone or by mail. Some people suggest checking one of the three credit bureaus every four months. It's good to check your credit report to make sure there aren't any mistakes.
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