Your First Bank Account

Checking and Savings Do Different Jobs

Checking is for money moving through: your pay lands there, your card spends from there. It earns little or nothing and that is fine, because that is not its job.

Savings is for money that is staying put. It earns a bit more, and being one transfer away rather than one tap away is doing useful work. That small amount of friction is most of the point.

At a credit union you may see these called a share draft account and a share account. Same things. The names come from the fact that you are a member and part owner rather than a customer, which is also why the savings account is the one that makes you a member in the first place.

Turn Off Overdraft on Your Debit Card

This is the single most valuable setting on the page, and most people opt in without realising.

If you opt in to overdraft coverage on everyday debit card purchases, a transaction you cannot cover goes through and you are charged a fee for it. If you do not opt in, the card is simply declined and costs you nothing. A fee can easily exceed the purchase that triggered it, which is how a coffee becomes an expensive mistake.

You choose this, and you can change it at any time with one call. A declined card is briefly embarrassing. The alternative is paying for the privilege of not noticing.

Set These Up on Day One

• A low-balance alert, not a zero-balance one. An alert at zero arrives after the problem.
• Direct deposit, if you have a job. Faster than a cheque and harder to lose.
• An automatic transfer to savings on payday. Small is fine. Automatic is the part that matters.
• Two-factor authentication, and the app rather than text where offered.
• Find the card freeze button before you need it, if the app has one.

Fees Worth Knowing About

Most teen and student accounts have no monthly fee, and you should not accept one. The ones that still catch people:

• Out-of-network ATM fees, often charged twice, once by the machine and once by your institution. Credit unions usually belong to a large surcharge-free network, so ask which ATMs are free and use those.
• Overdraft and returned-item fees, covered above.
• Paper statement fees at some institutions. Going paperless avoids it and means less mail to be stolen.

Your Account Is Not a Thing to Share

Two situations catch young people specifically, and both look like favours.

Someone asks to use your account to receive and forward money, sometimes framed as a job, sometimes as helping a friend whose account is frozen. This is money laundering, the money is usually stolen, and the account holder is the one who is traceable. The answer is always no, regardless of who is asking.

Someone sends you a cheque and asks you to send part of it back. The cheque will bounce after it appears to clear, and the money you sent was real. Available is not the same as paid.

Also: never give anyone a one-time code texted to you, including someone claiming to be from your credit union. That code is the lock on your account. Nobody legitimate ever needs it.

Later, Not Now

Certificates, money market accounts and investing all matter, and none of them matter yet. Get the two basic accounts working, get the automatic transfer running, and leave the rest until there is something to move.