Banking 101: An Introduction to Banking Services

Banks offer many services to help you manage your finances. Basic features like checking accounts, for example, allow you to store your money, pay bills online and withdraw cash when you need it. Other bank offerings can provide you with opportunities for saving and growing your funds, which can help you make the most of your hard-earned money.

Here, we’ll explore some banking basics, including what banking is and how checking and savings accounts work.

What is banking?

Banking is the process through which financial institutions, such as banks and credit unions, accept deposits, provide loans and offer various financial services. 

Today, some banks are online-only, while others may have both an online presence and brick-and-mortar branches. Banks with physical locations may have more ATMs and convenient locations, which is something to think about when deciding where to open an account. You may also want to consider whether a bank charges fees for using out-of-network ATMs if they don’t have convenient ATM locations. 

It’s also important to know whether a bank is insured by the Federal Deposit Insurance Corporation (FDIC), which protects your money up to a certain amount (per depositor and ownership category at each bank that’s FDIC-insured). If your money is with a credit union, your funds are insured by the National Credit Union Administration (NCUA).

Banking products and services explained

Most banks offer a range of products that can benefit account holders in different ways. Two common mechanisms for managing and growing your money include checking and savings accounts. Let’s take a closer look at these classic bank features, as well as some additional services financial institutions commonly offer.

Checking account 

You might consider a checking account as your central financial hub where money comes in and goes out on a regular basis. With a checking account, you can receive or deposit money — usually via cash, check or electronic deposit. With many features for sending and accepting funds, a checking account can be used to pay bills, make purchases with a debit card or withdraw cash.  

Savings account 

Savings accounts can be a valuable resource for setting aside money for a big-ticket purchase or emergency expenses. They typically offer the opportunity to earn interest on the funds in your account, and you can link them to your checking account to move money from one to the other. Your bank may allow you to set up automatic transfers, enabling you to send a specific amount from your checking account each month. 

Additional banking services

Banks may offer ways to borrow money, such as personal loans, credit cards and mortgages. Loans can provide you with more liquid cash when you need it, which you repay with interest over a set period of time. Mortgages are a type of loan used for purchasing homes, which allows you to pay for them over time. Credit cards allow you to make payments using the bank’s funds and repay your balance at a later date.

Financial institutions may also have more ways to save and grow your money, such as high-yield savings accounts and certificates of deposit (CDs). High-yield savings accounts typically provide higher interest rates than traditional savings accounts, and CDs offer higher interest in exchange for keeping money in them for a set period.

Why banks matter in financial management

Banks can provide a convenient, secure place to store your money until you need to use it. While it can be useful to have some cash on hand, it’s generally more secure to keep most of your funds in a bank account where they’re protected with cybersecurity measures and insured by the FDIC. When you need to access your funds, features like online bill pay and your debit card allow you to make payments and withdrawals. By taking advantage of modern banking tools, like setting up recurring payments and low-balance alerts, you can manage your funds with greater confidence.  

Banks can also help you save. If you’re working toward a specific goal — for example, saving up for a new car or paying for a home renovation — you can track your progress in your savings account. Some banks even provide budgeting tools and detailed insights into your spending habits, which could allow you to identify areas where you could improve your budgeting.    

How to choose the right bank services for your needs

Whether you’re new to having a bank account, looking to open an account with a new financial institution or want to learn more about the different ways banking can benefit you, it’s helpful to do your research and find the right fit. 

A good place to start could be by considering your financial goals. Are you looking for a way to manage your money and save a little? You might decide on linked checking and savings accounts. Do you want to earn a little more interest on savings you don’t need immediate access to? A CD might be what you need. Research products and the banks that offer them. Consider things like accessibility. For example, are ATM locations nearby? Does the bank offer a convenient mobile app?

Banking services that work for you

While many people decide to open checking and savings accounts as their go-to banking choices, they’re just the tip of the iceberg in terms of what many financial institutions can offer. As you become more familiar with the basics of banking, you can inquire about more services that might be available to help you grow your money for the future.

If you’re interested in starting an account today, you can open a Citi checking or savings account easily online or by visiting a branch.

Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.