Banking and saving, explained
Where to keep your money, how to avoid fees, and how to make it earn a little while it sits.
Banks and credit unions give you a safe place to keep money and tools to use it.
A checking account is for everyday spending. You use a debit card or a payment app, and the money comes straight out of your account. A savings account is for money you're keeping, and it pays you interest. Rates vary a lot: some online "high-yield" savings accounts pay many times what a typical big-bank savings account does, so it's worth comparing.
Watch out for fees. An overdraft happens when you spend more than you have. The bank might cover it and charge a fee, sometimes $30 or more. Turning off overdraft coverage, setting balance alerts and checking your account often all help. Also watch for monthly fees and ATM fees.
Is your money safe? At a bank with FDIC insurance, or a credit union insured by the NCUA, deposits are protected up to $250,000 per person, per bank, if the bank fails.
The most important savings habit is an emergency fund: money set aside for surprises like a car repair, a broken phone or a lost job. A common goal is three to six months of expenses for adults. For a teen, even a few hundred dollars means a surprise doesn't turn into debt.
The trick that works: pay yourself first. Move money into savings right when you get paid, before you spend any of it, ideally automatically. Saving whatever is left at the end of the month rarely works.
For teachers: covers NC EPF EPF.MCM.2.1 Using financial institutions to reach goals; EPF.MCM.2.3 Cash, debit, payment apps and credit cards; EPF.MCM.2.2 How interest and fees affect spending, debt and savings.
In the news
Real stories from recent issues, each with class slides and a worksheet.
New issues about banking and saving show up here as they come out.
Lesson worksheets
- Compound interest and the rule of 7220 minutes. Watch interest earn interest, and estimate how fast money doubles.
- Banking basics20 minutes. Checking vs. savings, debit cards, overdrafts and how your money is protected.
Words to know
- Checking account
- A bank account for everyday spending. You use it with a debit card, transfers and bill payments.
- Savings account
- A bank account for money you're setting aside. It pays some interest.
- Debit card
- A card that spends money straight out of your bank account.
- Overdraft
- When you spend more than you have in your bank account. Banks may charge a fee or decline the payment.
- FDIC insurance
- Government protection for money in U.S. bank accounts, up to $250,000 per depositor at each insured bank, for each type of account ownership.
- Certificate of deposit
- A savings account, often called a CD, that pays a fixed interest rate if you leave your money in for a set time, like a year. Taking it out early usually costs a penalty.
- Emergency fund
- Money set aside only for surprises, like a car repair or a lost job. A common goal is three to six months of expenses, built up over time.
- Interest
- The price of borrowing money. Borrowers pay it, and savers earn it.
- Compound interest
- Interest you earn on your interest. Over time, it makes savings grow faster and faster.
- Interest rate
- Interest shown as a percent of the amount borrowed or saved, usually per year.
Try it
More topics
Inflation · Interest rates and the Fed · The stock market · Investing · Budgeting · Paychecks and taxes · Credit cards and credit scores · Loans and debt · Insurance · Scams and identity theft · The economy: jobs, GDP and recessions · Supply and demand · Tariffs and trade
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