Petersons - Dont Break the Bank--College Version

Money Basics

By this point in your life, its likely that you already have a checking and/or savings account and probably have lots of experience with money and financial transactionsincluding shopping online and buying things at a store using methods other than cash. However, were willing to guess that you havent given much thought to what goes on behind the scenes and how the whole process actually works. And you may not know much about the banking system and what happens to allow you to use that debit card or write out that check.

In some ways, banking is much easier now than it was in the past. In many cases, you can handle a lot of your money-related tasks from home or wherever you happen to be, without ever going near an actual bank.

In other ways, though, the process is a lot more complicated, partly because you have so many more options. There are a lot of special types of savings and checking accountsand many ways to access those accounts, including online, by phone or using a smartphone or other device.

Well discuss some of the various systems involved with the banking process and delve into some specific banking-related topics, and we think youll discover some interesting things you didnt knowand possibly learn a few tips that might make your financial life a bit easier.

The important thing to know about the FDIC is that it protects banking customers against loss should something strange or unexpected happen to a bank. Heres a brief explanation of the FDIC from their website at ( http://www.fdic.gov ) .

The FDICthats short for Federal Deposit Insurance Corporationis part of the U.S. government. Congress created the FDIC in 1933 after a terrible economic period called The Great Depression when thousands of banks shut down and families and businesses all across America lost money they had deposited in those banks. The FDICs primary job is to make sure that, if a bank closes, all of the banks customers will get their deposits backincluding any interest theyve earnedup to the insurance limit under federal law. In the eighty years since the start of the FDIC, we have responded to about 3,000 bank failures, and we are proud to say that no depositor has lost a single penny of insured money.

Traditionally, most peoples first experience with the banking system was in the form of a savings account. In the past, when you opened a savings account, you would get a little book that looked similar to a passport where the tellers would write or type entries about your deposits, withdrawals, and other financial transactions.

These days, you access your account information online, and you will likely just receive an ATM card, which you will use to access your money and get account information.