Why is a bank account important?

Many people disdain banks, opting to keep their personal savings hidden within the home. These people even cite that saving under a mattress is no different than having a bank account since interest rates are so terribly low.

However, banks and credit unions in the USA are protected by the FDIC, a federal agency that insures customers will not lose their money if the bank folds. This protection is far better than hiding money at home and having it stolen, with no one to insure you'll get that money back. In fact, most money taken in home break-ins is never recovered. To put this into prespective, let's say you saved $1,000.00 and put it in a shoe box at the back of your closet. You never think your best girlfriend would ever take it, but she happens to see it while you're showing her your new shoes; later, she steals your money. You now have -0- cash. However, if you had your money in the bank, and the bank folded, you'd still have your $1,000.00.

A checking account also is much more convenient for bill paying. Online banking makes this monthly nuisance even easier. Many merchants and online merchants require a bank account and a debit card if you have no credit card. Actually, with interest rates climbing on most credit cards, a simple debit card and checking account will cost you far less on each purchase plus over time.