From our Free-Lance Correspondent

Another of the ways you can begin to participate in the American economy is to open a bank account. This is a very simple procedure. What is less simple is the myriad of variations and choices offered from one financial institution to another. You may decide to go with a large, national or regional bank or with a small, locally owned and operated bank. You may choose to put your money in a Savings and Loan or perhaps through your employer you can add a Credit Union to your list of options. Decide what you need, what you want and for what reasons. Then, do your research and go shopping for the best deal you can find. If you find reasons for having accounts in more than one place and can do so without spreading your finances too thin (such as making it impossible to maintain a required minimum balance), then go ahead!

Aside from conventional banks, these are some options you may find :

Savings and Loans are full-service financial institutions which hold your dividend-bearing share and make investments mostly in the form of loans on home mortgages.

Some businesses make employee-owned Credit Unions available as an employment benefit. The Credit Union offers full-service banking, also. Any profits are returned to the members in lower interest rates on loans, higher interest on savings and checking accounts and dividends which are distributed amongst the members. You can find out from the benefits office in your place of work if this is offered to you. Your money is guaranteed up to certain limits by the government in a Savings and Loan or a Credit Union as well as in a bank.

Note :  Credit Unions are under fire from the big banking institutions right now. If you are considering a credit union, we suggest that you stay informed as new regulations may be instituted.

The two basic accounts we recommend you begin with are Savings and Checking. Here are some questions to ask when you are looking for the right place to put your money :

·   What types of savings accounts do you offer and what are the terms for each? (Banks not only offer straight savings accounts but money market accounts, not to be confused with money market funds, Christmas Club accounts and other options.)

·   Which of these types may be connected to a checking account? (Research all of you options to find what best suits your needs.)

·   Do you require a minimum balance in either checking or savings? (Some places require a minimum balance for any account. Some may require a minimum balance for the savings account, but not the checking.)

·   What if my balance falls below that amount? (Some will just stop paying interest. Others will begin to actually charge your account because you have fallen below the minimum and you will see your balance fall more and more!)

·   What interest rate do you pay on savings? (Shop around for the bank that offers the services you need/desire and has a good interest rate which is paid to you for keeping your money with them.)

·   Do you pay an interest rate on checking? (If you maintain a certain balance, some banks will pay you interest on the money you have in your checking account. Some will pay the interest for each day your balance satisfies this minimum balance requirement.)

·   Do you charge a fee for checking? (At many banks there is a service fee for most checking accounts.)

·   Do you offer free checks? (Some banks do not charge you for the checks you use, if you use a certain style and order through them or if you have direct deposit.)

·   Do you have a per check fee? (Some accounts are arranged to charge you for each check you write.)

·   Do you offer Automatic Teller Machine access? (This is an ATM card which can be used at selected teller machines and for making payment directly drawn from your checking or savings account at any number of stores -- even the gas pump!)

·   Under what conditions is access free? (Some banks have their own machines which give you unlimited access. Other banks may give you access for a fee of a few dollars. Some may give you free use for a limited number of times per month.)

·   Do you offer banking by phone? Do you offer banking on the www? (Some banks and credit unions give you a number to call or a URL which enables you to check current loan and interest rates as well as transfer funds between your accounts, check your balance, even make payments on loans.)

·   Is there a fee for this service? (There are sometimes a limited number of calls or uses per month which are free.)

·   Do you return cancelled checks to me? (Some banking institutions save on costs by providing you with checkbooks which make carbon copies each time you write a check instead of mailing your cancelled checks back to you at the end of the month.)

·   Do you offer overdraft protections? (Some banks give you the option of using this service which provides you with a loan to cover any checks written which exceed the amount currently in your account. This is usually paid back automatically from your account at the current interest rate. Find out what that rate is BEFORE you use this service.)

·   If I overdraft my checking account what is the charge? (Some places charge huge amounts to cover your check with funds from your savings account. Some places lend you the money. Some places return the check marked “Insufficient Funds” to the place you attempted to make the payment.)

[For updated information on banking, see our July 26, 2002 article, Treasury Proposes ID Requirements for New Bank Accounts.]