Bank Accounts 101

Ah, the good old checking and savings accounts, which many of you likely already have. They may seem very intuitive but looking closer at them we can identify the unique features of each as well as the downsides to be aware of.


Mainly used for daily transactional needs like paying for groceries, services, and other goods, ordering checks and money orders, and usually comes with a debit card. You may also pay for larger transactions like rent or tuition with this account by using an electronic funds transfer.

  • Pros: Unlimited withdrawals and deposits, direct deposit capabilities, debit card usage, FDIC insured, ATM benefits, track spending easily, cannot draw more than the funds in the account
  • Cons: Fees (overdraft, monthly, and ATM), doesn’t accrue interest, minimum deposit

Almost everyone has a checking account to pay for everyday expenses and to gain access to a debit card, but this account is not a great place to store money that you do not intend on using for a while. It accrues marginal interest (<.1%) or none at all when you could otherwise store money in a high-yield savings account – we will get to it – or invest in securities. Additionally, watch out for fees arising from insufficient funds, using out-of-network ATMs, and monthly account maintenance fees – these fees have recently been reduced but are still prevalent at some banks.


Mainly used as a place to put excess money that you can SAVE; can also be used as an emergency fund. Savings accounts usually complement checking accounts because you don’t use them for everyday transactions, and some high-yield savings accounts can generate moderate interest rates while your money sits in them.

  • Pros: Ideal for saving money, accrues interest, FDIC insured
  • Cons: Withdrawal limits, low interest rates, fees, minimum balance

This account is great for use as an emergency fund because you can set money aside and draw on it later if an emergency occurs. The liquidity and moderate interest rate will also allow you to easily withdraw the money and earn incremental earnings on your deposits. Big banks like Chase and Bank of America have branches all over the country but offer negligible interest rates on savings accounts. However, more digitally inclined banks like Capital One or Goldman Sachs offer high-yield savings accounts with an APY > 3%.

The choice between a traditional bank and a FinTech bank all comes down to preferences. If you prefer the long-established and physical footprint of the big banks, then I would suggest going with Chase or Bank of America; otherwise, banking with a company like Capital One or even Goldman Sachs will provide you with minimum fees and a plethora of online services.

If you are an Oxford student, there is a BB&T ATM just off of campus near the post office. Visit the Chase right past the Emory B&N if you are an Atlanta student and you would like a bank with a physical footprint and nearby access to an ATM and client assistance. If not, give an online bank a try; well-known online-only banks offer special accounts and perks for college students.

Certificate of Deposit (CD)

The last commonly used bank account is called a CD. These allow you to lock in a guaranteed interest rate for periods ranging from 3 months to 5 years. Think of it as a long-term savings account that earns better interest but with stricter withdrawal rules. You put a lump sum into the account, say $1000, and get a locked-in interest rate dependent on the bank and time period that you choose (Capital One offers 4.15% on a 1-year CD). You cannot deposit more money until the CD has matured and any withdrawals will incur a fee.

A CD is a great option if you have money that you don’t need to use for months or even years and want to earn a modest, safe return that is guaranteed by all banks.

Note: A Bank is an institution that provides customers with a place to store money in certain accounts like those detailed above and usually has banking, mortgage, and loan services. Whereas Credit Unions offer similar services as a bank, but they are non-profit institutions that often share profits back with members. Membership is often based on location or place of employment.

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