State Savings Bank
State Savings Bank State Savings Bank

Money Smart for Young Adults

Bank On It: Everything You Need To Know About Banks

Why Banks?

Types of Financial Institutions

Opening and Maintaining a Bank Account 

Deposit and Non-Deposit Accounts 

ATM & Debit Cards

Privacy Notices & Opting Out

Preventing Identity Theft 

Knowledge Check 

Why Banks? 

Why do you (or should you) keep your money in a bank? There are a number of benefits to keeping your money in a bank including safety, cost, security, convenience, and ease of planning for your financial future. 

  1. Safety - Money is safe from theft, loss, and fire.
  2. Convenience - You can get money quickly and easily. Using direct deposit, for example, saves you time and allows you quicker access to your money. Funds that are electronically deposited into your account are available sooner than if you deposited a check. You can also use ATMs to get fast access to your money. Most ATMs are available 24 hours a day. If an ATM is not available, you can use your bank's ATM or debit card to make purchases instead of using cash. 
  3. Cost - Using a bank is typically cheaper than using other businesses (like a check cashing service) to cash your check or pay your bills.
  4. Security - The Federal Deposit Insurance Corporation (FDIC) insures deposits up to the maximum amount allowed by law. This means that the FDIC will return customers' money up to $250,000 per depositor, per insured bank based on the current Standard Maximum Deposit Insurance Amount (SMDIA) if a bank closes and cannot give its customers their money. 
  5. Financial planning - building a relationship with a bank establishes a record of paying bills, can help you save money, and is necessary for getting a loan.

Types of Financial Institutions

There are two major types of insured depository financial institutions: banks and credit unions. 

Banks are financial institutions that operate under federal and state laws and regulations. Banks make loans, pay checks, accept deposits, and provide other financial services. 

Credit unions are non-profit financial institutions owned by people who have something in common. Credit unions offer many of the same services as banks. You have to become a member of the credit union to keep your money there. 

You can tell if the FDIC insures a bank by the displayed FDIC logo. Most credit unions are insured by the National Credit Union Administration (NCUA). The deposit insurance rules are the same at NCUA-insured credit unions as they are at FDIC-insured banks. 

The FDIC has an online tool called the Electronic Deposit Insurance Estimator (EDIE). You can calculate the insurance coverage of your accounts at each FDIC-insured institution online at the FDIC Insurance page.

Choosing a Bank 

If you're getting ready to choose a bank, here are some questions to consider. 

Questions about the bank:

  1. Does the bank offer the services I need?
  2. Are there convenient branch locations and ATMs?
  3. What are bank's hours? 
  4. Do the employees speak my language? 
  5. Is it insured by the FDIC (or NCUA for credit unions)?

Questions about the bank accounts:

  1. What are the requirements for opening an account? 
  2. Is there a minimum monthly balance? 
  3. What are the recurring fees?
  4. Are fee waivers available if I need them? 
  5. What are the number of withdrawals allowed per month?
  6. Does this account earn interest?
  7. What is the annual percentage yield (APY) for savings accounts? 

Questions about ATM card and debit cards: 

  1. Are there any fees associated with having a debit or ATM card? 
  2. How many ATMS are available in my town and in other towns? 
  3. Are there any rebates, points, or benefits associated with using the card? 
  4. What are the debit card transaction or spending limits? 

Questions about mobile and online banking: 

  1. How do I access my online banking portal? 
  2. Is there an app for this bank? 
  3. Is online bill pay available? 
  4. Is mobile or online deposit available for checks? 

Opening a Bank Account

Opening and maintaining a bank account is not as difficult as you might think. There are four basic things you have to do: 

  1. Open the account.
  2. Make deposits and withdrawals. 
  3. Record interest and fees. 
  4. Keep track of your balance. 

As part of setting up your bank account, you will need to go through account verification. Banks must verify accounts for two reasons. First, the bank needs to make sure that you are who you say you are (and that you are legally eligible to open a bank account). Second, the bank may want to make sure that you are a trustworthy bank customer. Some banks may run background checks or search for a history of bankruptcy. This is to ensure that you will be able to responsibly manage your new account. 

  1. When you meet with a bank employee to set up your account, they will ask you to provide your name, address, birthday, social security number or individual taxpayer identification number, and ID. 

It may seem like a lot, but by requesting this personal information, the bank is able to protect your money and others. 

Deposit and Non-Deposit Accounts 

Bank accounts that allow you to add money to the account are called deposit accounts. Checking and savings accounts are two examples of deposit accounts. 

Checking Accounts

A checking account allows you to pay bills and buy goods with the money you have deposited. When you write a check, use an ATM or debit card, or bank online, the bank takes money from your account and pays it to the designated person or business. 

The bank makes a record of the deposits and withdrawals made each month. This record is available to you either by mail or online. It is a good idea to compare the rules of different accounts. For example, banks might require you to have a certain balance to open a checking account, earn interest, or avoid fees. 

Savings Accounts

A savings account is a safe place for you to save money. In general, you will be paid a small interest on the money in your savings account. In most cases, you cannot write checks using a saving account. In contrast to a checking account, you may be able to open a savings account with a few dollars. Similar to a checking account, the bank prepares a monthly summary of any changes to your savings account. You can review this summary every month by mail or online. 

Non-Deposit Accounts

Many banks also offer non-deposit accounts, or accounts that are not insured by the FDIC. Stocks, bonds, and mutual funds are examples or non-deposit investment products. These types of accounts have some level of risk. This means that you could lose some or all of the money deposited into the accounts. 

When you set up a non-deposit account (sometimes called an investment account) through your bank, a representative should provide a written explanation that these accounts are not insured, and may lose value. Always ensure that you have read and understand the terms of these accounts so that you can make an informed choice for your future. 

ATM and Debit Cards

When you open an account, you will probably be given the option to have an ATM card or a debit card. Both types of cards give you access to your account funds when you need them. An ATM card allows you to make deposits to and from checking and savings. You can usually check your account balance, print statements, and transfer funds between accounts. Some ATM cards can be used in stores that accept ATM cards in your bank's network.

Debit cards have all the same functions as ATM cards, but they also allow you to pay for goods and services in stores. Debit cards usually display a logo from the card network: Visa, Mastercard, American Express, or Discover. When you use your debit cards, the funds are immediately withdrawn from your account. 

When you use a debit card to make a purchase, the retailer may ask you to choose 'debit' or 'credit.' If you select 'debit,' you will be asked to input your four-digit PIN number. If you select 'credit,' you will be asked to sign a receipt. Either way, expect the amount of the purchase to be withdrawn from your account immediately. 

Additional Banking Services

Banks provide additional services with some deposit accounts and may charge a fee for these services. It is important to keep track of the fees charged if any. Common services that banks offer include: 

  • Direct deposit
    • One method your employer or a government agency might choose to issue your paycheck or benefits check.
  • Money orders
    • This service is used like a check to pay a bill. A money order is similar to a check. It is used to pay bills or make purchases when cash is not accepted. Many businesses sell money orders for a fee. Ask your bank if a business is requesting that you pay using a money order.
  • Mobile and online banking
    • This service allows you to check your account balance on a phone or computer. It may also include the ability to pay bills or transfer funds between accounts.
  • ATMs
    • a kiosk or terminal where you can deposit, withdraw, or transfer money from one account to another 24 hours a day.
  • Money transfers (AKA wire transfers)
    • A form of electronically transferring money from one bank to another. Most U.S. banks can send money to international banks.
  • Debit cards
    • A card used to buy things from a store or to pay another business. The money comes out of your bank account immediately. The debit card usually has a MasterCard or Visa logo. 
  • Remittances
    • A specific type of money transfer that goes to a bank or a person in another country. 
  • Loan
    • Money you borrow from a bank with a written promise to pay it back later.

Privacy Notices and Opting Out

Privacy notices explain how financial institutions and companies handle and share your personal financial information. They explain what information can be collected and how you can possibly limit your information from being shared with others. 

Privacy notices also explain how your personal financial information is protected. You will receive an initial privacy notice when you open an account and then every year thereafter. Federal law requires financial institutions to keep your personal financial information private. The general public does not have access to your personal financial information. Federal privacy laws give you the right to stop or "opt-out" of some sharing of your personal financial information. 

If you prefer to limit the promotions you receive, or if you do not want marketers and others to have your personal financial information, you must:

  1. Review the privacy notice to determine whether the company shares information with others, and if so, how you can opt-out. 
  2. Tell the credit reporting agencies not to share your information with lenders and insurers who use the information to decide whether to send you unsolicited offers of credit insurance. 

You can also opt out of receiving prescreened offers by:

  1. Calling 1-888-5-OPTOUT (567-8688)
  2. Visiting 

If you opt-out, you limit the extent to which the company can provide your personal financial information to non-affiliates, or groups outside of the company. You cannot opt-out and completely stop the flow of all your personal financial information. The law permits financial companies to share certain information about you without giving you the right to opt-out. Among other things, your financial company can provide to non-affiliates: 

  • Information about you to firms that help promote and market the company's own product or products offered under a joint agreement between two financial companies. 
  • Records of your transactions, including your loan payments and credit card purchases, to firms that provide data processing and mailing services for your company. 
  • Information about you in response to a court order
  • Your payment history on loans and credit cards to credit reporting agencies

Protecting Yourself from Identity Theft 

Identity theft is a common and preventable problem. With enough information about you, a craft criminal may be able to steal personal information (like your SSN, birth date, or credit card number) and use your identity to commit fraud or other crimes. 

Identity theft is a serious problem, here's why: 

  1. Despite the efforts of law enforcement, identity theft is becoming more sophisticated and the number of new victims is growing. 
  2. If the crime is not detected early, you may face months or years cleaning up the damage to your reputation and credit rating.  You may even lose out on loans, jobs, and other opportunities. 

Common Forms of Identity Theft: Phishing and Pharming. 

Phishing is when criminals send out unsolicited emails that appear to be from a legitimate source, like your bank, school, internet provider, employer, or government agency. These emails are an attempt to trick you into divulging personal information. Similar to phishing, pharming uses fake websites to capture personal information. Criminals create fake or misleading websites that appear legitimate, and your browser or URL bar may even show that you are in the correct website. This makes pharming more difficult to detect than phishing. 

Criminals target young people, even if they are too young to have a checking account or credit card. They can use your name, address, and SSN to open accounts. To protect your identity:

  1.  Never give out your social security number, credit or debit card numbers, PINs, passwords, or any other confidential information over the phone or via text message.
  2. Ignore online 'friend' invitations from people you do not know or from accounts that appear to be duplicates of an existing friend's account. Be careful about the profile and contact information you post on social-networking and employment-related websites. 
  3. Protect your computer. For example, install a free or low-cost firewall to stop intruders from gaining remote access to your personal computer. Download and frequently update security patches offered by your operating system and software vendors to correct weaknesses that a hacker might exploit. Use passwords that will be hard for hackers to guess. For example, use a mix of numbers, symbols, and letters instead of easily guessed words. Also, shut down your PC when you are not using it. For practical tips to help you guard against Internet fraud, secure your computer and protect your personal information visit
  4. Beware of storing and disposing of old mail.  Shred old papers with financial information. Before selling, donating, or disposing of a computer, be sure to perform a "factory reset" to scrub all data. 
  5. Be alert to signs that require "immediate attention." These include bills that do not arrive as expected, unexpected credit card statements, and calls or messages about debts or purchases you did not make.
  6. Regularly review your bank statements, bills, and credit report for suspicious activity. Call your bank if you see anything unusual.

Knowledge Check

Now that you have read through the banking basics, it's time to check your knowledge. On a separate piece of paper, record your responses. When you have finished, check your answers using the link below. 

1) Which of the following products are not FDIC insured?

  1. Stocks and savings account
  2. Savings and checking accounts 
  3. Stocks and mutual funds
  4. Checking account and mutual funds

2.) Which type of financial institution requires you to be a member in order to keep your money there?

  1. Banks and thrifts
  2. Credit unions
  3. Money markets
  4. Individual Retirement Accounts (IRAs) 

3.) What type of account is typically insured by the FDIC?

  1. Deposit account
  2. Non-deposit account

4.) Deposit accounts generally offer which of the following banking services? 

  1. Direct deposit
  2. Telephone and online banking 
  3. ATM and debit cards
  4. All of the above 

5.) A stored value card is a:

  1. Card onto which you can load money to be used for future purchases
  2. Money transfer that goes to a bank or a person in another country
  3. Document that is used like a check to pay a bill
  4. Method of electronically transferring money from one bank to another

6.) A _______ is the best person to help you deposit or withdraw money from your account. 

  1. Customer service representative 
  2. Teller 
  3. Loan Officer
  4. Branch manager

7.) During account verification, the bank will:

  1. Withdraw money from your new account
  2. Give you and account number
  3. Ask for your ID
  4. Offer you a credit card

8.) A debit card

  1. Is used to make purchases at retail locations and ATM cash withdrawals
  2. Has a "buy now, pay later" feature, like credit cards
  3. Is similar to a gift card from a retail store

9.) Two types of non-deposit accounts are:

  1. Checking and savings 
  2. Money orders and ATMs
  3. Stocks and bonds 
  4. Overdraft protection and checking fees

10.) Debit cards can be:

  1. A quick way to get a small loan
  2. A way to delay having a purchase come out of your account
  3. Paid off over time
  4. Used at many retailers

11.) The five advantages of using a financial institution are safety, convenience, cost, security, and financial future:

  1. True
  2. False

12.) Federal privacy laws give you the right to stop or "opt-out" of some sharing of your personal financial information. 

  1. True
  2. False

13.) How can you protect yourself from identity theft? Select all that apply.

  1. Keep a copy of your PIN in your wallet or purse in case you forget the number 
  2. Use secure mailboxes for incoming and outgoing mail
  3. Review your bank statements regularly for any suspicious transactions
  4. Share personal information in response to an incoming call or email from a stranger


After you have finished recording your answers, check your knowledge using this answer key


Automated Teller Machine (ATM): A kiosk or terminal where you can deposit, withdraw, or transfer money from one account to another 24 hours a day.
Balance: The amount of money you have in your bank account.
Bank: A business that offers you a safe place to keep your money and uses your deposits to make loans. This business is also called a financial institution.
Bank Statement: A monthly record of the deposits and withdrawals made.
Checking Account: A bank account that lets you write checks to pay bills or to buy goods.
Credit Union: A non-profit financial institution owned by people who have something in common. You have to become a member of the credit union to keep your money there.
Deposit: Money you add to your bank account.
Deposit Account: A bank account that allows you to add money to the account.
Deposit Slip: A piece of paper that tells the bank how much money you are adding to your account.
Direct Deposit: One method your employer or a government agency might choose to give you your paycheck or benefits check.
Interest: A percentage of your balance that the bank pays you for keeping your money at that bank. Not all accounts pay interest.
Loan: Money you borrow from a bank with a written promise to pay it back later.
Minimum Balance: A certain balance that banks might require you to have to open an account, earn interest, or avoid fees.
Money Order: It is similar to a check. It is used to pay bills or make purchases when cash is not accepted.
Privacy Notice: A written explanation of how the company handles and shares your personal financial information.
Remittance: A money transfer that goes to a bank or a person in another country.
Savings Account: A bank account that earns interest.
Thrift: A financial institution that operates under federal and state laws and regulations. Thrifts make loans, pay checks, accept deposits, and provide other financial services.
Withdrawal: Money you take out of your bank account.
Wire Transfer: A form of money transfer from one bank to another.

© 2024 State Savings Bank. All rights reserved.
Open/Close Chat Box