For most students, the process of choosing their first bank is usually influenced by where they grew up or where their parents already had an account. But how do you know if that bank is the right fit for you? What happens if you move away and your local bank doesn't have a branch nearby? If you don't already have a checking and savings account set up, it's probably a good time to get started!
Whether it's a traditional bank, a credit union, or an online bank, virtually everyone will need to have a relationship with a financial institution at some point in their lives. (Otherwise, how will you safely store your money once you get a job?) The main differences between these three institutions are that online and traditional banks are for-profit, while credit unions are non-profit. Credit unions tend to focus more on customer service and have lower fees, but can come with higher interest rates. Banks typically have higher fees, but can offer more accessibility in terms of location, mobile banking, and more robust rewards programs. Online banks are becoming more and more popular over time, as they are able to offer lower fees and better customer service than some of their traditional counterparts.
Two Main Types of Accounts
- Beneficial for anyone who wants to make frequent withdrawals or transactions from a bank account.
- Most standard checking accounts will come with a debit card. Unlike credit cards, a debit card is linked directly to your bank account, which means that money is immediately subtracted from your account each time you make a purchase.
- Setting up a checking account is generally very easy - you can apply online or visit a local bank branch.
- Have some limitations on how often you can withdraw funds, but generally offer flexibility ideal for building an emergency fund or saving for short term goals.
- Usually earn a small amount of interest on the funds within the account.
Understanding and Comparing Financial Institutions and Accounts
- Best Checking Accounts, Savings Accounts, and Banks/Credit Unions via NerdWallet
- What are Online Banks?
- Choosing Between eBanks and Traditional Brick-and-Mortar Banks
- Common ATM Fees by Bank