Setting Up Checking and Savings Accounts

Brandon Bennett -

In this post I'll be discussing two important bank accounts you should have: the checking and savings accounts.

  • The checking and savings account are the foundation of your finances and is what allows you to receive and send money.
  • It is vitally important that you have the best possible checking and savings account possible for you in order to put you on a good path towards financial success.

So here is everything you need to know about setting up a checking and savings account.

Checking vs. Savings

A checking account lets you deposit and withdraw money using debit cards, checks, and online transfers whereas a savings account is simply a place for short-term savings.

So, you will typically withdraw money from your checking account pretty often but rarely from your savings account.

Most people will setup a checking and savings account when they are young and will often stick with those accounts even if it's not the best option for them. This is usually because the last thing anyone wants to do is go and talk to a local banker. While that might be true, having the right bank accounts will help assure you have the right foundation to start building your financial future.

Mistakes to avoid when looking for a bank

When looking to setup a new bank account, be careful of some of the most common tricks banks play on you. If you setup accounts at top rated banks, then you will likely not have to worry about these.

  • Teaser rates: They'll often say something like "3 percent for the first two months." We are looking for bank accounts that will provide us value for years to come and therefore two months don't matter. So, don't fall for this trick.
  • Requiring minimum balances: There are plenty of good banks that don't require minimum balances, so there is no reason to go with a bank that does.
  • Up-sells: to expensive accounts like expedited customer service or worthless services. Good banks will provide good customer service as a default and won't make you pay for it. So, avoid an up-sell to an expensive account.
  • Holding out: by telling you the no-fee, no-minimum accounts aren't available anymore. They do exist, so if they keep saying no, then find another bank.
  • Bundling a credit card: with your bank account. If you didn't walk in specifically wanting the credit card, then don't get it.

Best Accounts

Now that you know about the difference between a checking and savings account and also what to avoid, I am now going to give you some recommendations on which banks you should consider opening an account with.

A lot of people will often open a checking and savings account with the same bank. While that could be good as a basic option, I recommend having your checking and savings accounts at different banks. Having accounts at separate banks forces you to keep your long-term goals in mind instead of blowing your savings on something you really don't need, since it takes a few days to transfer money between banks.

Online vs. Local

Online banks have become popular in recent years due to their better customer service and better rates offered. However, there are people who are hesitant to use an online bank because they think they will lose easy access to their money. My recommendation is to open a checking account at one of your highest rated local banks and then open up an online high-interest savings accounts. That way you will be able to go to your local bank to deposit cash or talk to a banker in person if you prefer. You will be able to easily transfer money between your checking account at your local bank and your savings account at an online bank.

Checking

So, as I just said, I recommend using a top-rated local bank for your checking account that way you can have access to deposit cash and the ability to talk to bankers in person.

Banks can vary by location, so I suggest looking for the highest rated local bank in your area on a website called Bankrate. You'll notice that banks like Wells Fargo and Bank of America are pretty low on the ranking list, so you'll likely want to avoid those. Check out the bank reviews: Bankrate

Savings

For savings accounts, I recommend using an online high-interest savings account.

The most popular accounts are from Ally and Capital One. You can look through the Bankrate rankings again to search for an online savings account. Check out the bank reviews: Bankrate

Optimizing your bank accounts

Now that you have chosen a checking and savings account from a top-rated bank with no monthly fees or minimums, you are good to go. However, if you have chosen to keep the accounts you currently have, here is a tip to make sure you optimize your accounts. Get rid of all fees you are currently paying.

For a checking account, the easiest way to get rid of fees is to setup direct deposit. This is where your employer deposits your paycheck directly into your bank account instead of giving you a physical check. If your employer doesn't offer direct deposit, then call your bank and ask to have the fees waived. Almost all fees are negotiable, so don't be afraid to call and ask. If they say no, then that is a perfect sign of why you need to change to a top-rated bank.

For savings accounts, some banks might require a minimum balance in order to waive the monthly fee. If you don't have enough money to meet the minimum balance, call your bank and ask them to waive the fee and tell them that you are actively saving more money and will eventually be able to hit the minimum. Again, if they say no, then it's time to find a new bank.

*Disclaimer: I am not a financial advisor. The ideas presented in my articles and videos are for entertainment purposes and not to be taken as financial advice.