Managing Your Finances: Why Do You Need a Personal Bank Account?

Many young individuals tend to ignore the importance of bank accounts and alternative bank accounts. In fact, millions of Americans have decided not to have a bank account in their lifetime. They have different reasons for doing so. Some feel like their money is too little to deposit in the bank, while others primarily have trust issues with banks.

If you are one of these people, you are missing out on many things. Let’s discuss the importance of owning a bank account and why you should have one.

Convenience

A bank account enables you to pay your bills and make purchases easily. For instance, you can use your checking account to pay your water or electric bill online. What’s great about this is that you will have statements that you have paid your dues.

Similarly, an ATM or debit card is convenient to use. You will never worry about running out of cash as long as you have your cards in your wallet. Further, you can even use your debit cards to shop. You just have to swipe it like a credit card.

Safety

Keeping your money at home or under your bed puts it at risk of theft. In addition, you are also putting yourself at risk of not being insured as you will have no proof that you have your money inside your home.

Banks offer protection as every depositor’s money will be federally insured. However, it’s important to note that the maximum amount that may be insured is $100,000 only. Banks guarantee that your money is safe. Besides, you can withdraw anytime you like, so there’s nothing to worry about.

Improves Your Credit Score

A bank account isn’t just for saving or storing money. If you do not have a credit history or your credit score is affected by adverse actions, owning a bank account can be your savior. Many financial institutions do not approve loan applications of people with no bank account as they have no means to track their spending habits. So if you want a quick loan application, make sure to have an active bank account.

However, loan companies can utilize alternative credit scoring-a modern method of determining an individual’s capacity to pay back a loan. While this can increase your chance of getting loan approvals, it does not guarantee that you can get approved for big loans.

Proof of Payments

Making a payment using your bank account instantly gives you a record that you can use as proof of payment. This is particularly important if you usually make big payments or forget to pay your bills, as you can simply check your records for validation.

What’s even better is that bank statements can be in any form. You can request a black and white file or download a soft copy through your mobile app or online account. Whether you need it or not, you should make it a habit to keep payment records.

The Best Way to Save Money

Indeed, you can save money on your piggy bank or your old shoebox. But your money will not gain interest if you do this. Plus, physical money could be at risk of getting destroyed by animals or pets.

When choosing a bank to open your account, go for banks that offer reasonable interest rates. Also, don’t forget to learn about the deductions and fees involved, like tax. This is important if you don’t want to end up paying more in extra fees than the money you’re saving.

Receive Money Instantly

In the digital world, online payments are dominant. If you usually receive compensation for benefits or wages, owning a bank account makes it easier for you to receive the money. You just have to give the sender your bank details and wait for the money to be deposited into your account. What’s more? You don’t even need to go to the bank or call them to confirm if the money is in your account. All you have to do is log in to your online account and check your latest transactions.

As you can see, there are so many benefits to owning a bank account. However, you need to be wary of fees you need to pay for every transaction you make. For instance, banks can charge their depositors if they withdraw money from another bank’s automated machine.

Furthermore, most banks require a maintaining balance that you should never touch to keep the account active. If your balance is below the required amount, the bank may charge you and deduct the payment from your money. Hopefully, this article has enlightened you about the advantages of owning a bank account. So start searching for the best banks and reap the benefits of being a bank account holder.

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