2/11/2013 8:00 PM ET|
Why you need a bank account
Protection and convenience are important reasons not to keep your money under the mattress.
Believe it or not, there are people who don't have a bank account. The reasons why they have been hanging on to their cash vary, but some think the fees and hassles of a bank account just aren't worth it. Instead, they use money orders, prepaid debit cards or plain old cash. But not having a bank account can put limitations on your financial life.
Having a bank account is a personal choice, not a requirement. However there are times when you may not be able to skirt by the fact you will need to open a bank account. Here are some of those reasons:
Lender/creditor requirements: Some situations will require you to have a bank account, because the information will be necessary on an application for a loan or mortgage. Lenders and other creditors may not have a lot of faith in your financial abilities if you are not keeping even a basic checking or savings account.
Check cashing: You may have to contend with other issues throughout your life, such as how to get a check cashed. Personal checks, payroll checks and other incoming monies may dictate your need for a bank account, if you receive checks frequently. You can cash checks without a personal bank account, but it may cost you fees for the service. If the check is written on an out-of-town bank, you may have to go to a check-cashing business, which will typically take a percentage of the check amount.
Bill payments: It can be hard to imagine paying bills via the mail without having a checking account, but some consumers bypass the banks and use money orders rather than checks. It's a lot harder to go through this process, including paying for the money orders each month, but the person will be able to skirt some bank fees. However, doing so poses a paper-trail concern. While money orders can be tracked, it may not be as convenient as having the backing of the bank in the event your payment doesn't make it to your creditor.
Lack of protection: Banks that are FDIC-insured will guarantee the safety and accessibility of your money. When you keep your cash in your drawer or under the mattress, there is no such guarantee. If your home catches fire or you are the victim of a burglary and your cash is gone, it is most likely gone forever. If the same situation strikes your bank, your money is protected.
No record of spending: If you spend only in cash and do not write down what you spend or where, you lose the ability to have accurate financial records for planning purposes. A bank account provides a monthly statement, which shows what you spend and where you spend it. These statements may be necessary at some point in your life, especially if you want to buy a home or qualify for a personal loan.
Exploring your options
Even if you have lived blissfully over the years without a bank account, there may still come a time when you will need proof of one to proceed in your financial life. There are several options other than traditional checking accounts. While fees for maintaining a bank account are certainly increasing, consumers can compare the many different features of bank accounts in both the online and offline markets.
Depending on your needs, you may be able to open a bank account that is reasonably priced and offers only the services you need. If you are just looking for a simple account that allows you to direct-deposit your payroll check or pay some monthly bills, make sure to compare several banks before making a commitment.
Check for the requirements on minimum balances, cost of account maintenance, ongoing fees for banking services and other features you might need. With a little research and comparison shopping, you will likely find an account that fits your needs without costing you a small fortune.
More from U.S. News & World Report:
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I see no real need for banks anymore......sounds like they can see the end is nearing for large corporate type banks and they will do anything to keep you from pulling out. No idea why we bailed these crooks out when they should have been jailed.
How do bank accounts have all these "Fees" and cost a lot to maintain? I have a chase checking account that is free and has been free for the 3 years I've had it. The 5/3 account I had before that was guess what, free also. The only fees I ever had is if I overdrew my account, but since I am no longer an idiot with my money and am a little more fiscally responsible I haven't overdrawn my account in years. They also will automatically transfer money from my savings or will give me a heads up to do it myself if an unexpected bill gets taken out before I put money in there, which also costs nothing to have. I also have a savings account that if I have less than $1000 in it they withdraw $4 a month to pay for it. I hardly see how $4 a month is a make or break fee considering most cash checking places charge more than that to cash a check and I'd say $4 a month is worth the convenience. That $4 fee is also only for my savings account, my checking is still free.
Oh, and I can deposit all of my checks on my phone, I literally haven't been to a bank in 2 years.
They charge us to use our own money, HELL NO, I closed all my accounts and went with a Credit Union, these companies don't get it there are alternatives out there like Cable TV I gave that the boot also $56.00 for basic cable, these people might as well show up with a GUN and a Mask and rob me face to face.
"Hidden" fees only get charged to your account if you don't pay attention,I've worked at a credit union. If you happen to "forget" about a bill and you overdraw... you pay a fee for owning the bank money now. It's pretty simple. And if you are a good customer most banks will reverse it for you. If you are paying a checking account fee on a personal account, well you got hosed for not asking questions on free checking accounts. I don't know a bank that doesn't have one.
I have never been charged a fee at a credit union or a bank. Don't blame the banks for "taking your money" when YOU haven't been responsible.
Banks/Credit Unions are pretty much a requirement in our society. Yes it is still possible to run everything with cash. My parents live in Mexico and that society is still very much entrenched in a cash culture. My father is always carrying a wad of pesos - I always worry he is going to get mugged.
Our society certainly has moved into the digital age, even checks are now going the way of the horse and buggy, they are almost all electronic transactions.
Here is my prophecy, cash will be extinct by 2050. We will all have chips embedded in us in order thwart fraud. Our choice, live off the grid and eat berries and bear meat in the Rockies...
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