ArticleDay 3: Checking vs. Savings… Really Know...
There is a BIG difference between checking and savings accounts, but not everyone really gets the difference. Well, you’ve come to the right place.
YOUR CHECKING ACCOUNT:
Your checking account is your active spending money—it’s what you use to pay the bills that you cannot pay with a credit card, and it’s where you get the cash that comes out of the A.T.M. It should never have a ton of extra cash in it. Period. A good checking account, which you must-have, includes:
•Many nearby A.T.M.s
•A.T.M.s that don’t charge you to withdraw cash
•A low minimum balance for free checking
•No monthly fees for having the account
•Online banking—to monitor accounts and pay bills online
•FDIC insurance coverage
Total Action Time: 15 minutes
 |
|
|
 |
| You’ll notice that we said there should be NO monthly fees for having account. No good LearnVest-er should pay for basic financial services ever again. Be smart and pledge that in 2010, you won’t pay unnecessary fees. |
Check to see if you have a good checking account by seeing if it offers the above six things. For example, ask yourself if you often pay to withdraw money from an A.T.M. and check your most recent checking account statement to see if you were charged a monthly fee simply for having the account.
If you don’t have a good checking account, open one now. Simply contact your bank of choice, one that will give you everything you need in a checking account. To compare checking accounts see the LearnVest checklist, "
Vow to never, ever keep more than the bare minimum of money that you need in your checking account. $100 in extra just-in-case money is fine, but anything beyond that should be shipped straight off to a savings account. Your money should always be working for you, and extra money can’t grow interest for you sitting in a checking account! 
;){kind=link}
So if your bank charges monthly fees how do u not pay that.
Find a new bank. There are many, many, many now that do not require monthly fees for checking accounts.
Great Post!
Hi Debbie! Is the monthly fee you pay for transfers, inactivity, minimum balance, number of checks you write? If it's one of these reasons, then you should figure out why exactly your being charged and this way you can potentially change you actions. Even so, you might want to consider searching for another account with lower minimums or no fees. We have a checklist that will walk you through that process here: http://www.learnvest.com/pages/check/I-Need-A-Checking-Account. Also I'm happy to personally chat off-line if you prefer. You can email me at Allison@learnvest.com.
Is this article suggesting we pay our bills using credit cards? My checking account card is also my visa, so I must keep enough money to cover the bills that will be coming out of my personal checking. That's certainly more than $100.
Hi there! It sounds like your Visa is actually a debit card rather than a credit card. So, if when you pay for things at stores with your Visa, the money comes directly from your checking account rather than being a "loan" you have to pay back in a bill every month, then your card is, in essence, a checking card. Checking cards (also known as debit cards) don't actually build up your credit. If that's the case, then the next best step for you is to make sure that you have a credit card in your own name: http://www.learnvest.com/pages/check/I-Need-To-Open-A-Credit-Card. Also, I'm happy to answer any questions off-line if you prefer. You can email me at Allison@learnvest.com.
Your checking account is what you use to pay the bills you can't pay with a credit card? Really? I would never pay a bill with a credit card unless it was an emergency and I didn't have the money for some reason. Otherwise, bills get paid from the checking account.
Also, I have my checking account set up where my savings account is used as overdraft protection. So if I overdraw on accident, the extra money will just come out of my savings and I won't be hit with any of those enormous overdraft charges.
Hi there! Thanks for question! We recommend using your credit card to pay your bills but this is ONLY (!) if you are a responsible spender. If you’re a dangerous spender and don’t feel in control of your urge to buy, then spend in cash and work toward controlling yourself. Here are some of the key reasons why if you're responsible, paying your bills with a credit will pay-off in down the line.
1. It’ll track all your purchases. At end of the month, you’ll see where you spent your money. If you spend crazily at bars, you’ll see it clearly and will know to chill on the cocktails, lady!
2. Insurance. If you make a big purchase (aka, electronics) with a credit card and then it breaks, your credit card has built-in insurance that’ll help you get your money back.
3. You can dispute charges. If, say, a waiter overcharged you for tip at a restaurant or the moving company didn’t ever show up, you can dispute that.
4. Everything you spend should be earning you rewards points or cash back. We love rewards!
5. All of your spending on only one bill is true simplicity! You only have to worry about one payment date too.
We recently published an article on this very topic so feel free to check it out. http://blog.learnvest.com/learnvest-daily/boot-camp/day-11-how-a-learnve...
I agree with your list of benefits to making purchases with your credit card if you're responsible, but using your credit card for all your purchases (such as electronics, drinks at the bar, and meals at a restaurant) is not the same as using your credit card to pay your bills. The article implies that things like your gas bill or electric bill should be payed with your credit card, because that's what "paying bills" means to most people. If the article meant to say that your checking account should be used for "purchases" you can't make with a credit card, then your wording is misleading.