Yes, You Need a Bank Account

by
Adam Rust

I understand why many workers choose to avoid banks. In fact, sometimes it seems like the banks are working hard to convince people not to use their services. In millions of American households, no one uses a bank. The traits of resourcefulness and independence define how we think of our country. Individuals, once bitten, are twice shy about checking accounts.  

I get it. The fees associated with some bank accounts can be scary. If you don’t park $500 or even $1,500 in an account, then you might have to pay monthly minimum balance fees of as much as $15. If you accidentally spend too much, then the bank will hit you with $35 overdraft charges. Bank branches don’t always give off a welcoming feel.

Last year, banks charged Americans more than $10 billion in overdraft fees. That incredible sum only accounted for about two-fifths of total charges on checking accounts. Moreover, it isn’t the well-off who paid for most of those expenses. It was the working folks who have to stretch their paycheck – the ones looking for ways to save dimes and quarters  - who paid the freight.

For all of those reasons and more, many people will say that they wish they had never signed on with a bank account.

So, if you count yourself among the ones who question the need for an account, I have to push back and say that you still need to get one.

Yes. Yes. Yes, you do.

You need a bank account because they open up so many financial possibilities. You need a bank account because shopping is increasingly a digital experience. It’s no longer the case that cash is best. You need to be able to shop online, to send money via your phone, and to pay your bills online without the cost of a stamp.

I tell people that they should think of a bank account as a tool. All tools are not the same. As any experienced tradesman will say to you, some are better than others.

First and foremost, some accounts should be avoided altogether. I believe that people coming back into banking may be better off if they can find a debit card account without overdraft fees. If you closed your bank account because you were stung by too many overdraft charges, then do yourself a favor and steer clear of that problem this time around. I like technology, and as for a result, I tend to believe that the each additional digital bell and whistles is a net positive.

Likewise, I try to get across the point that there is no best account. What one person needs differ from what another person should get. Going back to the tool analogy – think about chainsaws. To prune tall trees, you want a light chainsaw. To cut a tree at the root, you’ll want something with a big engine.

It is the same with an account.

You must reflect on what kind of account you need. If you hate going to bank branches, then you should be careful to pick an account that lets you deposit checks with your smartphone. If you know that you are going to use direct deposit, then look for a bank account that appreciates your commitment. Many will waive their monthly maintenance fee when you do so. If you like using ATMs, then make sure you find an account that has free ATMs near you.

Times When a Bank Account is Better than Cash

Buying things online: Hands down, digital beats cash online. A bank account will save you money because inevitably some store somewhere is selling stuff at a lower price than you can get at the corner store. Guaranteed. Throwing out all other possible opportunities, I am sure that a bank account will save you money every month through savings on the internet.

When You Want to Rent a Car: You cannot rent a car with cash. Period. Would you rent a car to someone who wanted to pay you in cash? Seriously? No, you wouldn’t.

When Someone Tries to Rob You: OK, it might be an extreme example, but carrying cash adds risk to your life. People who are known to carry a lot of cash attract the attention of criminals. People do get followed when they walk out of a check cashing store.

When You Want to Pay For Something Month after Month: It is so easy to set up an automatic recurring payment. Many people prefer doing this because it makes their life just a little bit easier. You never have to worry about when your cable bill is due. If you have an expense that tends to vary slightly, then a bank account can help here as well. I never know how much the electric company will charge me, but I do know that my lights aren’t going to get turned off because I forgot to pay the bill. A caveat is that letting a business pull money out of your account automatically can be a way to get an overdraft fee. But this can be avoided if you choose the right bank account (see reason number two above). If you find one that will not let you overdraft – as is the case with all of the debit card accounts on WiseWage – then you don’t have to worry about this problem.

When You Want to Receive Your Pay: This is a big one! If you have a bank account, you can receive your pay using direct deposit. Direct deposit comes with all kinds of benefits. You will save money because you will not have to take your paper check to the check casher. As a result, you won’t have to pay two to four percent for the cost of turning your check into cash (and maybe more to convert your bills into digits at the check-cashing outlet. You will also save time. You won’t have to go across town to the check casher at the end of your work week. You can go home and kick back, knowing that you’ve saved on gas and gotten home earlier.

When you have to pay someone who lives in another town: If you don’t have a bank account, then you will have to go to a payment kiosk (WUPay) or buy a money order. With the latter, you have to take that money order and send it by snail mail. If you had an account, you could use online bill pay to schedule the payment. But since you don’t, you need to find an envelope and affix a first-class postage stamp. More money!

When You Don’t Want to Worry About Being Short on Funds: Imagine a scenario where you are eating a meal with someone. You want to make a good impression. You think you have done an excellent job of ordering within your budget, but you didn’t account for the possibility that your friend wants to split the check. Since you didn’t pull enough cash out of your mattress, you are face-to-face with two less-than-ideal choices. One, you can refuse to split the check. Or secondly, before you have a chance to estimate how much your partner’s bill will be, you agree to do so but then risk that you might have to ask the person to cover your half. If you have a debit card, then this isn’t a concern.

Because a Debit Card is Kind of Cool: Are you impressed by wallet butt? Is it fun to get perks? Do you like apps? Have you tried a P2P service? Did you run out of envelopes? Seriously, get digital!

Conclusion: Get a Bank Account!

One: This isn’t a hard choice. You can have a bank account and still use cash when it suits you. With a bank account, managing your money will be more comfortable.

Two: Some cards are flat out better than others.

Three: Reflect on your needs. Think about how you will use an account. Choose wisely.

Four: Save time and money!

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