Money management and financial literacy rely heavily on how well an individual understands personal banking. That’s why you need a bank that’s ready and able to provide resources and guidance to help you make informed decisions.
From saving and checking account information to the most commonly asked questions, we’ll cover almost everything you need to know about interacting with your financial institution regarding personal bank accounts. Let’s get started.
What Is a Personal Bank Account?
Personal banking all starts with a personal bank account. Similar to a business bank account that stores financial assets for a company, a personal bank account is designed for an individual to manage their private finances.
Benefits of a Personal Bank Account
Every person is unique, meaning each account owner will take advantage of a personal checking account and related bank services differently. Here are some of the most common benefits of opening a personal bank account:
- Gain control over your money: Have the freedom to withdraw and add cash whenever you want.
- Save more finances: Monitor your spending, meet your savings goals and earn extra money, depending on the interest rate of your accounts. This is especially true for a high-yield savings account.
- Prepare for the unexpected: Knowledge is power when it comes to finances. By knowing how much you have put away, you can better handle emergency situations.
Where are you on your banking journey?
You’ve most likely dabbled in the world of personal banking, but may not be getting the most out of your financial experience. Your community bank can help you achieve your personal goals through education and smart decision-making.
Here is some basic financial vocabulary that will help guide you as we continue:
- Bank: A for-profit business where people can deposit and withdraw their cash as well as borrow.
- FDIC: An independent federal agency that insures deposits in U.S. banks and adds security in the event of bank failures. The phrase member FDIC indicates that your bank is covered by the federal government.
- Interest rate: In borrowing, it refers to the amount a lender charges and is usually a percentage of the amount loaned. In savings accounts, the interest rate is the amount earned on deposits held at a bank.
A key component of understanding personal finance is setting financial goals. These targets can change over time and should shift depending on where you are in your life. Do you want to increase your savings? Do you have dreams of planning a major vacation or buying a big-ticket item like a house or a car? Are you putting money aside to pay off large personal loans? Regardless of your goals, your financial institution can help you make the right choices to further you in your banking journey.
Opening a personal banking account
The first step to increasing your banking skills is to open the right kind of account based on your needs. As is the case with most financial topics, talk to your banker to discover the most ideal choice for you. But before going in for advice, it’s a good idea to have a basic understanding of your options. Here are a few different bank accounts and their purposes:
Personal Checking accounts
These types of accounts are made for customers to easily spend money, whether at a retail store or to pay bills. Because of this, checking accounts come with a debit card — not to be confused with a credit card — and can typically be accessed digitally through online banking. All of these options to access your account are meant to make sending, spending and transferring money easier.
At Bank Midwest, you can choose from a number of different checking accounts, each one tailored to your personal needs. If you know what you need, you can even open an account online.
Personal Savings account
As the name suggests, savings accounts are designed for saving purposes. They have interest rates that can help your money grow the longer you leave it in the account. There are also usually restrictions on the number of withdrawals you can make in a given time period.
According to the financial news outlet SpendMenot, 69% of adult Americans have less than $1,000 in a savings account. By creating savings goals, you can develop a savings plan using the right type of accounts to meet your goals.
Certificates of deposit
Certificates of Deposit or CDs have an interest rate premium that is applied to the money in the account, so long as the owner leaves the deposit there without any withdrawals for a certain period of time. There are fines and penalties if the money is withdrawn, which encourages savings and allows interest to build.
Depending on your dreams or financial goals, you can find the best bank account for your needs. Asking the right questions can help set you up for success. Here are five questions to ask a banker before setting up a bank account.
- What is the interest rate?
- What are the fines and penalties associated and how do I avoid them?
- What is an ATM fee and are there overdraft fees?
- Does the account have a minimum balance requirement?
- What are my mobile banking options?
Review your account’s features at least once a year to ensure it’s still meeting your needs. If you want to see if there’s a better choice, compare accounts.
Curious about managing or accessing funds in your accounts? Let’s learn more about options to win the online banking space.
The ease of digital banking
Digital banking empowers you to manage your accounts by completing or scheduling transactions securely over the internet using a computer or mobile device, turning a physical bank into an online bank. You can pay bills, transfer money, complete a mobile deposit and keep track of your transactions, all from your computer or mobile device. Mobile banking allows you to remotely manage your money from anywhere which can increase the hands-on experience.
With Bank Midwest’s digital banking solution you can:
- Make a mobile deposit and manage your direct deposit.
- Manage your debit card.
- Pay people or companies.
- Check your account balance.
- Take advantage of many other mobile options.
Online and mobile banking is secure because the online account is password protected and multi-factor authentication is required when new devices are trying to access accounts. Transaction and security alerts can give you peace of mind, knowing your assets and personal information is protected.
The best questions to ask your banker
One of the best resources for financial education is your banker. They’re professionals who have industry knowledge and experience as well as up-to-date information about the current market. As a customer of a bank, you should feel free to ask questions regarding your situation. Here are some of the best questions to ask your banker:
- How can banking help my credit score?
- Do I have to pay for replacement debit cards?
- What are my check options?
- How can I maximize my interest rate?
- Is there a monthly service charge or monthly fee I should keep an eye out for>
- Do you offer overdraft protection?
- Is there a minimum balance I must keep in my personal checking account?
- Am I able to make a mobile deposit into my account or set up online bill pay?
While it’s important to ask these questions, there may be times when your banker is required to ask you questions about your account, as well. If you ask for a withdrawal or wire transfer that seems out of the ordinary based on your past actions, your banker may ask you a few questions to ensure you and your money is protected from fraud or coercion. Like a doctor asks patients queries to gauge their health level, your banker does a similar check in to help keep you safe.
Feel comfortable working with and more effectively using community bank services by partnering with a financial institution that has your best interest. You have more personal bank account options than you may know and, with a little communication and curiosity, you can get the most out of your personal banking experience.
Reach out to Bank Midwest today to get started!
Post updated. Originally published December 2021.