A bank account is the foundation of nearly every other financial move you will make — getting paid, paying bills, saving for a goal, and building the banking history that supports future credit and loan applications. This guide covers the basics in enough depth to get started, and links out to a deeper guide on every topic below.
Types of Bank Accounts
| Account Type | Best For | Key Feature |
|---|---|---|
| Checking account | Everyday spending, bill pay, direct deposit | Easy access, usually low or no interest |
| Savings account | Building an emergency fund, short-term goals | Earns interest, limited withdrawals per statement in some cases |
| Money market account | Larger balances wanting some interest with easier access than a CD | Higher minimum balance, check-writing sometimes included |
| Certificate of deposit (CD) | Money you will not need for a fixed period | Locked-in rate, penalty for early withdrawal |
How to Choose a Bank
Traditional banks offer branch access and a full suite of products but often pay minimal interest on deposits. Online-only banks typically pay higher interest and charge fewer fees since they carry no branch overhead, but you lose in-person service. Credit unions are member-owned and often offer the most favorable rates and lowest fees, but membership eligibility can be limited by location, employer, or association.
What Protects Your Money
FDIC insurance protects deposits at FDIC-member banks up to $250,000 per depositor, per bank, per ownership category. Credit unions carry equivalent protection through the NCUA. This means your money is protected by federal backing even if the bank itself fails — one of the most important basics to understand before choosing where to deposit your money.
The Complete Guide Series
Each topic below covers one piece of the banking basics in full depth:
Getting Started With Banking — Full Series:
- How to Open a Bank Account: Step-by-Step Guide
- Checking vs. Savings: Which Do You Need First?
- How to Choose a Bank: Online vs. Traditional vs. Credit Union
- Banking for Teens and Minors: Joint and Custodial Accounts
- What Is FDIC Insurance and How Does It Protect Your Money
- How to Open a Bank Account After Being Denied
- Banks That Don't Use ChexSystems
Been denied a bank account? That is often related to a specialty reporting agency, not your credit score. See the Specialty Credit Reporting Agencies Guide for ChexSystems, Early Warning Services, and more.
