The Benefits of a Bank Account

• Banks are much better guardians of money than the proverbial mattress.bank image by Pefkos from Fotolia.com
  
  Opening a bank account, or several different kinds of accounts, doesn't just protect your money. It can help protect your future by adding interest to the money you save, as well as offer you the chance to get a car loan or house mortgage. Banks offer a variety of accounts for short-term and long-term needs. But rates and fees can vary, so you need to shop around for the best deals.
  
  

Safety

• Pick a bank covered by the Federal Deposit Insurance Corp. (FDIC), which insures a variety of deposits, such as checking, savings, trust, certificates of deposit and individual retirement accounts, up to $250,000. Since the FDIC was created in 1933, no depositor under the federal insurance program has ever lost money. As long as the bank is covered by the FDIC, there is no need to apply for yourself. Coverage is automatic.
  
  

Interest

• Depositing your money in a bank means the bank is allowed to lend that money out. In return for the use of your money, the bank pays you interest. The amount of interest you accrue varies, depending on the bank, the account you set up and the overall economy. And while, say, a certificate of deposit may not necessarily give you the greatest return on your money compared to other investments, your cash is at least not sitting idle. Interest rates constantly change, so shop around for the best deal. Also look out for bank fees, which also vary, and which can possibly negate gains from interest.
  
  

Convenience

• Paying for goods and services with cash is sometimes impractical or unsafe. Opening a savings or checking account can give you the means of paying without using a money order or a big stack of dollar bills. Unlike cash, a check records how much money you spent and where it went. Your account may also allow you to pay with a check or debit card, which can also give you quick access to cash at automatic teller machines. Your bank may allow you to open an online account, from which you can pay bills automatically every month.
  
  

Credit

• If you don't have a credit history but have a checking account in good standing, it may be easier obtaining credit from your bank. When shopping for a checking account, make sure you get overdraft protection. In case you spend more than your balance, that protection will protect your credit rating. It's possible to get a checking account with bad credit, but you will probably be charged higher fees than usual and could be offered limited services.