Why Opening Your First Checking Account is So Important
Why Opening Your First Checking Account is So ImportantYou might view checking and savings accounts as something to think about when you’re older. The truth is, it’s never too early to learn how to manage your money. For high school or college age students, a basic checking account is the perfect place to start. Not sure if this is the right step, or need more information? We have a few great reasons why you should open a checking account:
- You have convenient access to your own money while it is safe in a bank
- Most checking accounts come with debit cards, so you don’t have to carry around much cash
- You can use digital payment services like Zelle®, Venmo, PayPal, etc.
- Online banking apps make checking your balance and making deposits super easy
Let’s discuss each of these points in more detail.
The benefits of having a checking account as a young adult
First and foremost, a checking account allows you to have easy access to your money. If you have a job (even seasonal or part-time), it is wise to have a safe and secure place to deposit your paychecks and cash tips. Plus, there’s a sense of accomplishment that comes from earning money and opening your first checking account. It is an important first step in taking control of your financial future.
Once you’ve set up your account, take advantage of all the digital tools your bank offers! Sign up for online banking so you can access your account on your computer, or download the mobile app on your phone. Setting up online banking makes it easy to keep track of your balance so you always know how much money you have and don’t risk overspending. Plus, you can even set up account alerts to notify you when a payment is made or your balance goes below a certain amount. This not only helps you budget appropriately, but can alert you to charges you don’t recognize so you can contact your bank right away.
Your debit card is a direct line to the funds in your account. You can use it for purchases in stores, online, at ATMs, to make mobile payments with your phone and more. Make sure to keep track of your debit card and keep it in a safe place—misplacing it even temporarily can be enough time for someone else to steal it and use it. Your bank may also offer additional security services that let you turn your debit card on or off or text alerts that ask you about suspicious activity using your card.
Checking account = relationship building
Opening a checking account begins a relationship with a bank. This might not mean much to you now, but in the future you may need a mortgage to help buy a home, a car loan or the funds to get your small business up and running. Having a pre-existing relationship with your bank can make the process less stressful since you’re working with someone who you know and has experience with your financial history. Plus, don’t be afraid to visit or contact your local branch for any questions you have about finances. Your local banking experts are a great resource for learning about budgeting, savings and more.
Checking accounts and secured credit cards
After taking your first step toward financial independence with a checking account, a secured credit card might be a beneficial next step.
A secured credit card is different from a regular credit card and requires a refundable security deposit (a set minimum amount of funds) in exchange for a line of credit. This is a great option for young adults who have limited or no credit history. Unlike prepaid or debit cards, a secured credit card reports to credit bureaus (the folks who generate credit reports). Building your credit history and credit score makes it easier for you to apply for a regular credit card, car loan or other loan in the future.
Use your secured credit card based on the amount of funds you have available from your deposit, and do your best to pay back the full amount owed each month to avoid being charged interest. You don’t need to use a secured credit card forever—actually, the goal is to move (or “graduate”) from a secured card to an unsecured card.
When you have improved your credit score, consistently shown a timely payment history (meaning you have no late payments), and don’t spend over your deposit limit, consider moving on to a regular credit card. If you are interested in applying for a secured credit card, research the options available and talk to your bank about how to set one up.
Are you ready to open your own checking account?
There are many ways to declare your financial independence—is it time for you to take the first step by opening a checking account? Do some research and determine what’s best for you. It’s important to build good money management skills early as they help you throughout your entire life!
Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.
This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.
Posted: May 27, 2021