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April 23, 2010
Opening a Checking Account
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If you don’t have a checking account already, Financial Literacy Month is a perfect time to start one. A checking account will help you manage your money and bill payments, build your credit history, and make a budget (pdf, 0.34 MB).
Check Writing Basics
Before you open a checking account, it’s important to know how to write a check:
- Write the date (in any format) on the top right-hand line.
- On the “pay to the order of” line, write the name of the person or company receiving your check.
- On the next line, spell out the amount of the check using words (example: $25.10 would be twenty-five dollars and 10/100).
- In the box on the right-hand side, write the numerical value of the check (example: $25.10).
- On the bottom left-hand line, write what product or service the check is paying (example: April gas bill).
- On the bottom right-hand line, sign your name.
Opening a Checking Account
The first step in opening a checking account is to select your bank or other financial institution. Go to the bank of your choice, fill out an application, and provide the bank with a deposit to open the account (note that some banks may not require a beginning deposit). You will be given an account number and an ATM card, if you choose that option. You will also be given a book of checks (some banks will give you free checks).
Consider these tips when opening an account:
- Open your account at a bank near your home or office so that it is convenient to use.
- Consider how many ATMs the bank offers, what types of fees they may charge, and whether 24-hour customer service is available by phone.
- Look into the services you are getting for your money to make sure they meet your needs.
- Make sure that any bank with which you open an account is FDIC-insured, which means your money is insured by the federal government for up to $100,000.
Remember not to bounce checks. When someone cashes a check you’ve written, and its amount is greater than the amount in your account, that check will bounce. Most banks will charge a hefty fee—on average about $27—for each check you bounce.
You can avoid bouncing checks by balancing your checkbook. When you write a check, subtract the amount from your current balance. That money is gone, even though it remains in your account until the check clears.
Using your bank’s online bill-payment system is another good way to avoid overdrawing on your account. Just make sure you remember when any automatic recurring payments are going to happen.
Paying Bills Online
Many checking accounts offer free online bill payment. Your bank will let you know if they provide this service. If they do, they will provide you with instructions on how to set up the online bill payment.
Additionally, many service providers may provide you with the option of paying through their websites. To enroll, you will need to provide the information requested by the service provider, which may be your checking account number (found at the bottom right of your check) and routing number (found at the bottom left of your check). Your service provider may also give you the option of setting up an automatic deduction, so that you do not have to log on each month to pay your bill.
Saving on Student Loans
Having a checking account is a good way to manage all of your bills—and it could help you save on your student loans.
Some lenders and servicers offer an incentive for paying your student loans on time or making a certain number of payments in a row. Setting up automatic online bill payment ensures that you’ll never be late. Also, some lenders will reduce your interest rate just for allowing them to deduct your payments directly from your bank account every month.
Give your loan holder a call or look up their website to see if they offer programs like these and how you can apply for them.
