Why open a bank account? Benefits of checking and savings accounts.
Both a checking and savings account can be helpful tools for managing your money and planning ahead.
A checking or savings account can make it easier to get paid, pay bills, and keep your money protected. Compared with nonbank alternatives like check-cashing services, payday lenders, or some payment apps, a checking account or savings account may help you avoid fees, access your money more conveniently, and may benefit from FDIC deposit insurance.
There are many digital ways to handle money today. Still, if you don’t have a bank account, everyday transactions can take more time. Understanding the benefits of having a bank account can help you decide which financial tools fit your needs. Here are key things to know about the services banks offer and how they can fit into your financial life.
The benefits of having a bank account
For many, a checking and savings account can be a safe and affordable way to manage money. When you open a bank account, you get:
Security: Keeping money in a bank account is typically safer than carrying cash. If you cash a check at a check-cashing service, you may walk out with all your money in cash without an easy way to keep it safe, increasing the risk of loss or theft.
Cost savings: Compared to bank account fees, check-cashing services and payday lenders may charge higher fees—sometimes a percentage of the check amount—and some money transfer services charge per transaction.
Convenience: A checking or savings account gives you multiple ways to access your money, including debit cards, ATMs, online banking, and mobile banking. With direct deposit, you can often receive paychecks or benefits faster than waiting for a paper check.
Access to financial professionals: Banks may offer loans, credit products, and other financial services. Guidance from bank staff or financial professionals can help you plan and make informed decisions.
Why should I trust banks?
Banks must follow laws and regulations designed to protect consumers, and regulators monitor banks for safety and soundness. Many banks are backed by the Federal Deposit Insurance Corporation (FDIC), which insures your deposits in covered accounts up to $250,000 per depositor, per account ownership category. You can check whether a bank is FDIC-insured using the FDIC’s BankFind tool. Bank On’s list of certified low- or no-cost bank accounts is another helpful resource.
Banks also use security measures to help protect your money and your account information. For example, banks may monitor for suspicious activity and alert you to potential fraud so you can act quickly.
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Why do I need a bank account?
Nonbank options—such as some financial apps, check-cashing services, or payday lenders—can be useful in specific situations, but they don’t replace everything you can do with a bank account. Relying solely on nonbank services might mean paying more in fees for routine tasks like cashing checks, sending money, or paying bills. A bank account can also make common money tasks simpler and safer.
One of the biggest benefits of having a bank account is the ability to do everyday money tasks safely and efficiently. Below are quick answers to common questions about how a bank account can affect everyday life.
Do I need a bank account to get paid? Many employers prefer or require direct deposit into a checking account or savings account. Direct deposit can give you access to your money faster than waiting for a paper check, and it can help you avoid check-cashing fees. Government benefits and tax refunds can also be deposited directly into a bank account.
Do I need a bank account to qualify for a credit card or a loan? Some credit card companies may not require a bank account, but having one can make it easier to apply and manage payments. Lenders may review bank statements to understand your income, assets, and spending patterns when deciding whether to approve a loan.
Do I need a bank account to pay rent? Some landlords accept cash, but paying rent with a check or electronic transfer from your bank account is often safer and more convenient than carrying large amounts of cash.
Do I need a bank account to pay bills? A bank account makes it easier to pay bills online, by phone, or by check. While some companies accept money orders, money orders usually come with fees that can add up over time.
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