YouTube transcript (ZlMJfmdSmD8) — Transcript

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1. 0:00chances are you have both a checking and
2. 0:02a savings account at your bank or credit
3. 0:04union
4. 0:05but do you know what makes these two
5. 0:07types of accounts different
6. 0:08[Music]
7. 0:13hello and welcome to practical personal
8. 0:15finance where you get the information
9. 0:17you need
10. 0:18to understand and succeed with money i'm
11. 0:21andrew scheer
12. 0:22and managing your money in the most
13. 0:24effective way possible
14. 0:25all starts with the proper use of both a
15. 0:27checking account
16. 0:28and a savings account today i'm going to
17. 0:31highlight the key differences between
18. 0:33these two
19. 0:34essential accounts and give you my
20. 0:36advice for how to use each
21. 0:38make sure you stick around until the end
22. 0:40of the video when i'll touch on three
23. 0:42other types of bank accounts you should
24. 0:44become familiar with
25. 0:45do me a favor and give this video a
26. 0:48thumbs up
27. 0:49and if you're new around here hit that
28. 0:51subscribe button
29. 0:52you're about to learn something new
30. 0:54about money
31. 0:56the primary differences between savings
32. 0:58and checking accounts
33. 1:00have to do with how you access your
34. 1:01money and earn interest
35. 1:03let's start by talking about access
36. 1:06there are a bunch of different ways to
37. 1:08access
38. 1:08money you have stored inside a checking
39. 1:10account you can stop by your bank and
40. 1:12withdraw it in person
41. 1:14get it at an atm use a debit card or
42. 1:17write a check
43. 1:18and as long as you've got the funds you
44. 1:20can generally process as many
45. 1:22transactions
46. 1:23as you want when it comes to savings
47. 1:26accounts
48. 1:26the story is a little bit different you
49. 1:29can still withdraw your money by
50. 1:30stopping by your bank or at an atm
51. 1:33you might even be able to transfer that
52. 1:34money over to your checking account
53. 1:36using your bank's website or app but
54. 1:39with a savings account
55. 1:41there are no debit cards or checks on
56. 1:44top of that
57. 1:45there is usually a limit to the number
58. 1:47of transactions you can process
59. 1:48every month typically that limit is just
60. 1:51six
61. 1:52transactions but rules are constantly
62. 1:54changing
63. 1:55so you should check with your bank to be
64. 1:57sure
65. 1:58clearly savings accounts have some
66. 2:00serious disadvantages compared to
67. 2:02checking accounts
68. 2:03when it comes to accessing your money so
69. 2:05what is it that makes savings accounts
70. 2:07worthwhile
71. 2:08well money in your savings account
72. 2:10typically earns a little bit of
73. 2:12interest if you've got a fairly
74. 2:14substantial amount of cash in a savings
75. 2:16account
76. 2:17you might be able to earn 10 or 15 bucks
77. 2:19per month just by letting it sit there
78. 2:22that kind of money is not going to make
79. 2:23you rich but at least it'll pay your
80. 2:25netflix bill every month
81. 2:28checking accounts on the other hand earn
82. 2:30very little if any interest at all
83. 2:33because you're less likely to constantly
84. 2:35be depositing and withdrawing money from
85. 2:37a savings account
86. 2:38banks can make a few bucks by loaning
87. 2:40that money to other customers and
88. 2:42charging interest
89. 2:44does this mean you should worry about
90. 2:45your bank losing the money you have in
91. 2:47savings
92. 2:48of course not you can still withdraw or
93. 2:50transfer
94. 2:51any money stored in your savings account
95. 2:53at any time
96. 2:54but because you're less likely to be
97. 2:56doing so on a regular basis
98. 2:58your bank can feel more comfortable
99. 3:00lending it out
100. 3:01that's why you'll earn some interest on
101. 3:03the money in your savings account
102. 3:05it's worth mentioning that these
103. 3:06differences don't always hold true
104. 3:09for example you might come across
105. 3:11something called a high yield or high
106. 3:13interest checking account with an
107. 3:15interest rate that's comparable to
108. 3:16savings accounts at other banks
109. 3:19this is pretty common now especially for
110. 3:21online banks
111. 3:23because these banks have fewer expenses
112. 3:25than traditional
113. 3:26brick and mortar banks they can pass
114. 3:28some of their extra profits along to you
115. 3:31the customer if you can manage to do
116. 3:33your banking without visiting a physical
117. 3:35location
118. 3:36an online bank could be a great option
119. 3:39you could earn some solid interest on
120. 3:41money in your checking account
121. 3:42and even more on money in your savings
122. 3:44account it's also worth mentioning that
123. 3:47no matter which type of account you
124. 3:48store your money in
125. 3:49it'll be insured by the fdic if you're
126. 3:52with a bank
127. 3:53or with the ncu sif if you're with a
128. 3:56credit union
129. 3:57so in the unlikely event that your
130. 3:59financial institution goes out of
131. 4:01business
132. 4:02you're covered for up to two hundred
133. 4:03fifty thousand dollars of deposits
134. 4:06if you need to keep more than two
135. 4:07hundred fifty thousand dollars in the
136. 4:09bank
137. 4:10you can open accounts at multiple banks
138. 4:12to stay under the limit
139. 4:13but i wouldn't recommend keeping
140. 4:15anywhere near that much money in the
141. 4:16bank
142. 4:17you would stand to lose a lot of value
143. 4:19due to inflation
144. 4:20no matter where you're doing your
145. 4:21banking the best use of a savings
146. 4:23account is for saving and storing money
147. 4:26while the best use of a checking account
148. 4:28is for spending money
149. 4:30i've got both a savings and a checking
150. 4:32account open at my local credit union
151. 4:34i have my paychecks deposited into the
152. 4:36checking account
153. 4:37and i also pay all of my bills using the
154. 4:39checking account
155. 4:41in my savings account i store my
156. 4:43emergency fund as well as any additional
157. 4:45money i'm saving up
158. 4:47right now i've got some extra cash in
159. 4:48savings that will eventually go toward a
160. 4:50down payment on a home
161. 4:52when you're evaluating different banks
162. 4:54or credit unions for their checking
163. 4:56and savings accounts you want to find
164. 4:58one with no monthly fees
165. 5:00no minimum account balances and a good
166. 5:03interest rate on savings
167. 5:05in my experience the best place to do
168. 5:07your banking is at a local credit union
169. 5:09online banks are a close second in
170. 5:12addition to checking in savings
171. 5:14there are three other types of bank
172. 5:15accounts that you should be aware of
173. 5:17the first one is a money market account
174. 5:20this type of account is kind of like if
175. 5:22a checking account and a savings account
176. 5:24got married and had a baby
177. 5:26money market accounts typically earn
178. 5:28more interest than savings accounts
179. 5:30and allow you to conduct transactions
180. 5:32using a check or debit card
181. 5:34but you're limited to a small number of
182. 5:36transactions per month
183. 5:37and there's typically a high minimum
184. 5:39balance required
185. 5:41i made an entire video dedicated to
186. 5:43money market accounts
187. 5:44and i'll leave a link down below the
188. 5:47second type of account to be aware of
189. 5:48is called a cash management account this
190. 5:51one is a lot like a savings account
191. 5:53but instead of it being at a bank or
192. 5:55credit union it's at an investment
193. 5:57brokerage
194. 5:58cash management accounts similar to
195. 6:00money market accounts
196. 6:01combine a lot of advantages of
197. 6:03traditional checking and savings
198. 6:04accounts
199. 6:06if you're doing a lot of investing it
200. 6:08might be a good option to look into
201. 6:10last but not least is your good old
202. 6:12certificate of deposit or cd
203. 6:15this type of account is like a savings
204. 6:17account that earns more interest
205. 6:18but has more restrictions when you
206. 6:21deposit money into a cd
207. 6:23you promise your bank that you won't
208. 6:25touch it for a specified period of time
209. 6:28that period of time would be as little
210. 6:29as three months or as much as five years
211. 6:33in exchange for your patience you'll
212. 6:35earn a lot more interest than you would
213. 6:36if it was just sitting in savings
214. 6:39the longer time period you commit to the
215. 6:41more interest you'll earn
216. 6:43cds are not a good place to store your
217. 6:46emergency fund
218. 6:47because you can't predict when an
219. 6:48emergency will come up and you'll need
220. 6:50that cash
221. 6:51so aside from that if you know for a
222. 6:53fact you won't need
223. 6:54access to some of your cash for a
224. 6:56certain period of time
225. 6:58you may want to look into a cd but for
226. 7:01money you're not planning to use
227. 7:02in the next three to five years you'll
228. 7:05be much better off investing in
229. 7:06something like an index fund
230. 7:09what types of accounts do you have with
231. 7:10your bank or credit union
232. 7:12let me know in the comments if you
233. 7:14enjoyed this video you'll love my video
234. 7:16where i go more in depth about money
235. 7:18market accounts
236. 7:19you can watch that one by clicking right
237. 7:21here
238. 7:22and if you're not already a ppf
239. 7:23subscriber then click right here
240. 7:26thanks for watching i'm andrew scheer
241. 7:28and i'll see you
242. 7:30next time