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Beating the banks with checking and savings accounts

Bill Boyer

Issue date: 9/24/10 Section: News
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It's a good idea to have both a savings and a checking account. It's also important to analyze your bank's customer service, any fees you are paying, and the interest you are receiving. Consider switching to a new bank if you don't like what you see.
It's a good idea to have both a savings and a checking account. It's also important to analyze your bank's customer service, any fees you are paying, and the interest you are receiving. Consider switching to a new bank if you don't like what you see.
[Click to enlarge]
Opening up checking and savings accounts are the first steps in taking control of your personal finances. If you already have a checking and savings account, you are on the right track. If your parents manage them though, you should probably ask them permission to be reading a newspaper all by yourself without them holding your hand and singing you a lullaby.

Having a checking and savings account will provide you with a strong foundation for your personal finances. However, for this to work, you must understand and optimize your bank accounts so that you beat the banks and not vice versa. Although these accounts are arguably the simplest to understand compared to other personal finance issues, many people become overwhelmed and suffer from hidden bank fees and poor returns.

As you probably know, a checking account lets you deposit money and withdraw it via checks, debit cards, and online transfers. Savings accounts pay interest and are used for short to midterm savings (typically up to five years). This includes saving for Christmas gifts, a vacation, a down payment on a car, or even a wedding. Once again, the main difference here is that savings accounts pay interest. Unfortunately, most large banks only pay 0.5 percent interest, whereas inflation is typically around 3 percent. This means that while you might be earning 0.5 percent every year, you are actually losing 2.5 percent annually when you consider the purchasing power of your money.

You might be wondering why having both accounts is necessary. The simplest answer is that this system makes managing your money very easy. Think of your savings account as a place where you deposit your money to earn interest while your checking account is where you withdraw money from. Checking accounts are designed for easy withdrawal, while federal regulations prevent you from making more than six withdrawals per month from a savings account. Having a savings account also gives you great way to budget your money. If every month you deposit $100 into your savings account and leave the rest for spending, you will not be able to access that $100 very quickly and will have successfully saved it.
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Issue Summary

News

  • Beating the banks with checking and savings accounts
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  • Saturday Tutoring Program at Church of the Covenant begins 21st year
  • Season of giving begins with Charity Choice 2010
  • Students shack up for Habitat for Humanity
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Sports

  • Another game slips away as CWRU men's soccer falls to Oberlin 2-1
  • Freshly hired swimming head coach to kick off a new era
  • Levey sisters kick up pace for Spartans on the pitch
  • Spartan Spotlight: Kristina Vaci
  • Volleyball wins 8 in a row

Fun Page

  • Fun Page Solutions 9/24/2010

Opinion

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  • Editorial: Thinking beyond our buble
  • State Your Case 09/24/2010
  • Taking the hit: the case for legalizing pot

Focus

  • Art for art's sake
  • Artists and other community members chalk up CMA
  • Asia Town's Mooncake Festival offers scant food and performances, far less than expected
  • Communication breakdown
  • Delta Gamma hosts entertaining, philanthropic Anchor Splash
  • First-ever Farm Harvest Festival kicks off tomorrow
  • Serena Maneesh
  • Visitors "Walk All Over Waterloo" in celebration of area revitalization
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