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Ask an Nerd: How Can I Set-Up My Bank Accounts?
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Ask an expert: How Do I set up my Bank Accounts?
The right combination of accounts at banks can help you improve your financial management by taking advantage of different advantages.
by Spencer Tierney Senior Writer | Certificates of deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer banking writer at NerdWallet. He has written about finances for individuals since the year 2013 with a focus on certificates of deposit and other banking-related topics. He has had his work highlighted by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. The location of his work is Berkeley, California.
Updated Dec 9 2022
Written by Sara Clarke Assistant Assigning Editor | Banking Sara Clarke is a Banking editor at NerdWallet. She was an editor, as well as project coordinator in various newsrooms over the past two years, including most recently working for U.S. News & World Report. She managed projects such as The U.S. News education rankings and rankings for the Best States rankings. Sara has been featured in SiriusXM Business Radio and iHeartMedia's WHO Newsradio and has been quoted in The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other publications. She is based near Washington, D.C.
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The primary homes for an bank relationship are your checking and savings accounts. Just as you would organize your home differently or even move to a new home, the way you organize your bank accounts could need to be changed over time.
If you're anything like me, and have accounts at the same bank as your parents, maybe there's enough change in your life to look into whether a new bank is better suited to your requirements.
Let's find the appropriate type of bank and best combination of accounts and tools to suit your needs.
Which bank accounts are suitable for me?
There's no need to be thinking about this one. Checking accounts are used for spending, and savings accounts are meant to be used for saving funds as well as earning interest.
But you might need additional or specific accounts, so ask yourself:
Do I plan to share my finances with someone? If yes, then you may need joint accounts.
Do I need to have some savings out of reach? Certificates of deposit are a form of savings account that can do just that, and they are able to earn you a percentage of guaranteed interest.
Do I want a better savings rate or lower fees? Banks online offer typically, with low fees and no minimum opening. The best rates are over 3 percent. These accounts could be an addition to your primary account.
>> COMPARE:
Savings Cash Management CD Checking Money Market
Member FDIC
SoFi Checking and Savings
APY 4.00% SoFi members with direct deposit are eligible to get up to 4.00% per year in annual percentage yield (APY) on savings balances (including Vaults) and 1.20 percent APY on their checking balances. No minimum amount of direct deposit required to qualify for the 4.00% APY for savings. Members without direct deposit will earn 1.20% APY on all account balances , including checking and savings (including vaults). Rates of interest are subject to change and subject to change at any point. The rates listed were last updated on 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Min. balance required for APY $0
Member FDIC
Marcus by Goldman Sachs Online Savings Account
APR 3.75% 3.75% APY (annual percentage yield) with $0 minimum balance to earn the stated APY. Accounts must be in an open balance in order to stay open. APY valid as of 02/14/2023.
Min. balance to APY $0
Member FDIC
CIT Bank Platinum Savings
APY 4.75 percent
Min. balance to APY $5,000
They combine the features and services similar to checking, savings and/or investment accounts in one account. Cash management accounts are generally offered by non-bank financial establishments.
These cash accounts combine features and services that are that are similar to checking, savings and/or investment accounts in one product. These accounts for managing cash are usually offered by non-bank financial institutions.
on the Wealthfront website.
Cash Account at Wealthfront
APY 4.30%
Min. balance for APY $1
on the Betterment's website.
Betterment Cash Reserve - Paid non-client promotion
APY 4.20 Percentage of annual percentage yield (variable) is at 03/27/2023.
Min. balance for APY $0
CDs (certificates of deposit) are a type of savings account that comes with the option of a fixed rate and time generally, and have higher rates of interest than standard savings accounts.
CDs (certificates of deposit) are a form of savings account that comes with the option of a fixed rate and time typically, they have higher rates of interest than traditional savings accounts.
Member FDIC
Marcus is a Goldman Sachs High-Yield 10-Month CD
APY 5.05 percent 5.05 percent APY (annual percent yield) as on 03/28/2023. Special Offer Expires 09/15/2023.
Ten months of term
CIT Bank CDs with no Penalty
APY 4.80 percent
The term is 11 months
Checking accounts can be used to deposit cash on a daily basis and for withdrawals.
Checking accounts are utilized to deposit cash on a daily basis and for withdrawals.
Deposits are FDIC Insured
Current Account
APR N/A
Monthly fee $0
Chime Checking Account
APY N/A
Monthly fee of $0
Member FDIC
Axos Bank(r) Rewards Checking
APY 3.30 percent The annual percentage yield could be up to 3.30 percent, according to the following rate rewards Direct deposits (not including intra-bank transfers from an account) with a total of $1,500 or more every month earn 0.40%. A qualifying direct deposit is required for the remaining rates to be eligible. Ten (10) point-of-sale transactions per month using your Rewards Checking Visa(r) Debit Card to make ordinary purchases that have at least $3 for each transaction, or enrolling in Account Aggregation/Personal Financial Manager (PFM) will earn 0.30%; maintaining an average daily balance of at least $2,500 for the Axos self-directed trading Invest account earns 1.00%; maintaining the average balance per day of at least $2,500 a month in an Axos managed Portfolio Invest account earns 1.00 percent. Likewise, making monthly payments to an open Axos Consumer Bank loan (commercial or business loans excluded) via the Rewards Checking Account can earn a maximum of 0.60 percent.
Monthly fee of $0
Market accounts for money pay interest rates that are similar to savings accounts and have some checking features.
Market accounts for money pay interest rates similar to savings accounts, and come with certain checking features.
Member FDIC
The Discover Bank Money Market Account
APY 3.50 percent
Min. balance to APY $1
How many bank accounts should I have?
The quick answer is: It depends.
The ideal number is "the minimum number of accounts required to achieve your goals and to support your household," says Derek Brainard who is the national director of financial education for the nonprofit AccessLex Institute. "Two is the bare minimum, however a lot of people exceed that for the sake of organisational reasons."
Multiple deposit accounts could aid in budgeting by using an internet-based version of the , which traditionally involves putting money into envelopes that are earmarked for specific bills or goals. Instead, you could have an account with savings for each goal or a checking account for different types of expenses. This could be way more efficient in comparison to ATM cash withdrawals and using envelopes.
But this setup may not be for everyone.
"Do your multiple accounts provide security or anxiety?" says Saundra Davis the founder and executive director of Sage Financial Solutions, a San Francisco Bay Area-based non-profit. Davis holds eight banking accounts, which include personal and business checking accounts and a savings account to cover regular expenses, and an emergency savings account (commonly called an ).
"How we live our lives should be reflected in how we manage our money," she says.
What's the best type of bank to me?
The same goes for the other types, however, you might not know the options you have . Let's go over the various types of banking institutions.
Bank vs. credit union
Both offer similar accounts, but banks are for-profit businesses while credit unions are cooperatives for not-for-profit purposes that require membership based on the location of their headquarters or other variables. Banks, particularly the largest are more likely to offer modern technology for online banking. However, you may find lower fees and better rate on loans as well as savings generally, at the credit union.
Brick-and-mortar vs. online bank
A brick-and-mortar or traditional bank is a network of ATMs and branches, as well as in-person support to address urgent issues or for specific services like cashier's checks , or for the signing of legal documents with a notary. While an online bank typically lacks locations and the accompanying services, it is able to offer much higher rates on savings accounts and lower charges than a traditional bank.
A brokerage can offer banking
A brokerage or investment firm can handle banking as well as investing, if you're looking for this convenience. A company's bank account equivalent is often one that is usually insured to cover funds that are beyond the Federal maximum of deposit insurance of $250,000. This insurance allows you to get funds back if the bank fails.
Combining types
You can have your money at multiple institutions in fact, you might benefit from it. I have one of the traditional banks that is the same as my parents, however I use the cash to pay credit card bills quickly. The year 2015 was the first time I created an investment account with high yields which offered a sign-up offer and then ended up admiring the same bank's check account to use its debit card that has no foreign transaction fee.
I might switch to be completely online, but what happens if I need to go in person for a service I've not yet needed for example, cashing a check over the limit set by my online bank for mobile check deposit, or talking to the bank's lending representative at a branch while applying for a new loan? Keeping both institutions gives me access to different perks and services.
What bank tools do I need to use?
Many banks offer features that may help with managing your account, such as alerts to aid in budgeting or detecting fraud. You can also make automatic transfers to transfer some of your monthly earnings from checking accounts to savings on a regular basis.
The primary benefit of automatic transfers is the ability to automate your decision to save regularly, according to Brainard. "The one drawback is that it limits cash flow flexibility." Make sure your checking balance is sufficient for paying monthly bills , so you don't have to make back-and-forth transfers.
While automated transfers have their place, I've realized that the peer-to peer payments system Zelle can be used in a way that the other transfer applications Venmo as well as Cash App don't. Because Zelle is integrated in a number of banks' applications and includes the two banks I use, I joined in both of my Zelle Accounts (one to each of my banks) and have been able send almost instant transfers between them. This is better than waiting for the up to 3 business days I had to wait for these transfers.
As with similar apps like Venmo however, Zelle's main danger is that you cannot cancel a transaction once it's made, even if you transfer funds to the incorrect person.
Transaction alerts are another tool which can assist you in budgeting or identify fraud. they're delivered via email or text messages. The most frequent alerts are for withdrawals or deposits over the amount of a certain amount, or the balance drops below a certain threshold, and upcoming payment reminders. I've set up credit card transaction alerts for nearly every purchase just to be sure I can spot a purchase that I did not make.
How often should I review my bank setup?
Dana Twight, certified financial planner and the owner of the Seattle-based firm Twight Financial Education, recommends evaluating your banking setup every 2 to 3 years. When your income fluctuates or your expenses change, it could be time to review your financial needs.
Other reasons to switch banks or accounts may include:
A major life occasion. Being married could mean opening joint accounts. Likewise, having or adopting children can require opening new accounts. If you are looking to get a mortgage or start a business may lead you to opening a new institution, such as a credit union or bank with cheaper loans than your current bank.
A bank that isn't satisfying your requirements. The bank may begin to charge fees on your account, or customer service isn't helping you resolve serious issues.
Looking to give back to an institution that is based on your values. Certain credit unions and banks, such as or banks, play crucial roles in their communities , and they are advocates for social changes.
"Banking at a Black-owned institution is essential to me, but they don't have the same backbone and infrastructure that a large bank does," Davis says. "I am aware that I have to pay a fee every month to put my money in there and do that because it matters for me."
About the author: Spencer Tierney is a writer and NerdWallet's authority for certificates of deposit. The work of Spencer Tierney has been featured by USA Today and the Los Angeles Times.
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