Banking 101: An Introduction to Banking Basics

Banks offer many services to help you manage your finances. A checking account, for example, allows you to store your money, easily pay bills online and withdraw cash when you need it.

Banking can also 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, whereas others may have both an online presence and brick-and-mortar locations. The latter may have more ATMs and convenient locations, which is something to think about when deciding where to open an account. It’s helpful to consider whether a bank charges fees to use 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). Credit unions are insured by the National Credit Union Administration (NCUA).

Banking products and services explained

Most banks offer many different products. Two common ways to manage and grow your money include checking and savings accounts.

Checking account: 

This account can be considered your central financial hub where money comes in and goes out. You can easily receive or deposit money – usually via cash, check or electronic deposit. A checking account is key for daily spending and can be used to pay bills, make purchases with a debit card or withdraw cash.  

Savings account: 

Savings accounts can be great places to set aside money for a big-ticket purchase or emergency expenses. You may be able to earn interest on the money in your savings account. You can usually link your checking and savings accounts to easily move money from one to the other. Your bank may let you set up automatic transfers so you can send a certain amount from your checking account every month. 

Banks may offer ways to borrow money, such as personal loans, credit cards and mortgages. They may also have more ways to save and grow your money, such as high-yield savings accounts and certificates of deposit (CDs). 

Why banks matter in financial management

Banks can provide a convenient place to store your money. While you may choose to keep some cash on hand at home, you probably want to avoid having large amounts of money sitting around.  

Banking can also help simplify how you manage your money and support your long-term financial goals in a number of ways. Banks can facilitate a range of transactions, from accepting direct deposits to transferring funds between accounts to paying bills, helping to save you time and effort.  

You can use a variety of tools, such as setting up recurring payments and asking to be alerted when your balance gets too low. If you’re working toward a specific goal – for example, saving up for a new car or paying for a home renovation – you can easily track your progress in your savings account. You can also set up automated transfers from your checking account to your savings account to help you save before you spend. Some banks even provide budgeting tools and detailed insights into your spending habits.  

How to choose the right bank services for your needs

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

Consider what could help you achieve your financial goals. Are you looking for a way to easily 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 high-yield savings account or CD might be what you need. Research products and the banks that offer them. Consider things like accessibility. For example, are ATM locations nearby? Do they offer a convenient mobile app?

You can open a Citi checking or savings account easily online or by visiting a branch. Visit Citi.com/banking to find Citi locations or open an account. 

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.