Most of us will agree that there are few things that can compare to the thrill and exhilaration of opening that first bank account. Many of you will agree that it probably marked your independence as well as opened your eyes to financial freedom. In most cases, people open accounts in the same banks in which their parents had opened their first accounts many years ago.
No worries there, if they are satisfied with the services of their choice of financial institution. You need not worry about your money. However, there is a big possibility that their bank might not be offering new and better services that other companies now offer. Smaller, conservative banks do not often introduce new services or options to their clients.
These days, most banks have begun to offer a number of flexible bank accounts to suit various needs. As the demand from consumers increase, institutions are coming up with ways to be more competitive. The interest earning checking account is a bank account that the old-fashioned account holder would adore. Another is the savings and insurance account for those who wish to protect themselves with an accident insurance, all the while earning interest.
The time deposit now enables you to transfer the interests on a monthly basis, to your specified bank account. These banking institutions are making sure that whatever new needs might arise in our lives, there will be an account suitable for us.
Whatever bank account you choose, and whatever services you wish to avail, you have to ask yourself a number of questions before you decide.
- Are you looking for an account that will earn a huge interest? You could think about a savings account. Whilst keeping your money secure, you're earning off of your savings. Savings accounts are also coupled with ATM/Debit cards which you can use to purchase from online stores, restaurants and grocery stores.
The only obstacle (and a minimal one at that) is that a visit to the ATM would be necessary to withdraw money.
- Are you looking for an account that will enable you to pay for utilities? You should seriously think about getting a checking account. All lending institutions as well as utility service providers accept checks as payments. Checks are as good as cash - you don't even have to worry about sending it via mail. However, most banks do not offer interest for checking accounts, and even charge for the services.
- Do you want your money to earn without gambling it? You really need to give some thought to the time deposit service. It is just a matter of choosing the institution with the highest interest rates, as well as the terms in which you can withdraw you money. A rolling time deposit gives you free reign to your money, all the while letting you cash in on interests.
You are not limited to just one option. Just take out the time to talk to your bank and ask about their new services or promos. Finding that perfect bank account should not be a problem at all.
AER
AER stands for Annual Earnings Rate. AER is used to calculate the annual amount that you earn on an investment or savings account. The higher the AER, then the better the investment or savings account. If you are looking for a savings account then compare AER's to work out where your money is going to make the most profit.
APR
APR stands for Annual Percentage Rate, and is the amount of interest that you pay each year on a loan or mortgage. The lower the APR then the less you will pay yearly on that item of borrowing. Items with high APR's like credit cards have APR figures around 15-20% whereas mortgages have a low APR figure of about 5-7%. The quickest way to compare loans is to look at their APR values.
Chip and PIN
Chip and PIN is the current system used to pay for items or withdraw cash using a credit or debit card. The card has a 4-digit PIN, or personal identification number, that you enter into a cash machine or till machine in order to retrieve money or pay for goods. The chip on the card holds information that, combined with the PIN, allows the machine to identify you as the correct owner of the card. Chip and PIN is more secure than the previous magnetic strip and signature technology that was used a few years ago.
Overdraft
An overdraft is a sum of money that you are minus within an account. If you go beyond the amount of actual money you have in an account, then you go into the overdraft. Many accounts have a pre-arranged limit that allows you to go overdrawn, which can be useful, as unauthorised overdrafts will cost you a lot in interest and fees.
Phishing
If you use online banking, then Phishing is a term you might have heard of but you might not know what it means. Phishing is a form of scam or illegal attempt to get hold of your bank details online so that they can withdraw money from them. When online banking started this was a big problem, but with increased security measures the problem is getting better. Most Internet browsers include a Phishing filter to stop such practices from occurring.
Standing orders and Direct Debits
Standing orders and Direct Debits are similar in some ways, but different in others. Both involve a regular amount being transferred from one account to another. Standing orders are a regular, fixed amount that you pay to another person or company, usually monthly. Direct Debits are an amount of money, which can be fixed or varied, that is removed from your account at set intervals. One example of a Direct Debit is mortgage repayments.
Getting advice
If you are unsure about any other banking terms, then visiting your local bank branch or looking online might help. Never be afraid to ask about something, because if you don't understand something that is part of your account policy, you could lose money or not be taking full advantages of the features on offer to you.
Both Ajeet Khurana & Peter Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.