A bank account is a safe place to keep your money, receive your pay and pay your bills. It is usually the first financial tool you set up as an adult, so it helps to understand how it works before you open one.
This article is the reading companion to the free Mondosol lesson Money Matters: Banks & Accounts, part of the Money course. Read it, watch the videos, or press play and listen first, then practise in the lesson.
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In this article
What a bank does
A bank looks after your money and makes it easy to use. You can pay by card or app, receive wages, and move money to other people. Banks also lend money to others and earn interest from that, which is why they can pay you a little interest on savings in some places.
Main types of account
| Account | What it is for | Good to know |
|---|---|---|
| Current (checking) account | Everyday money: pay in your wages, pay bills, use your card | Usually little or no interest; check monthly fees |
| Savings account | Money you do not need right now | May pay interest; some limit withdrawals |
| Joint account | Shared by two people, for example a couple or flatmates | Both people can usually spend all of the money |
| Youth or student account | Accounts designed for young people | Often lower fees; rules depend on the bank and country |
Names and rules differ between countries, so check what each one is called where you live.
How to choose
Compare a few banks before you decide. Look at:
- Fees: monthly fees, card fees and charges for sending money abroad.
- Access: a good app, free cash machines near you, and support in a language you understand.
- Interest: what a savings account pays, and whether the rate can change.
- Safety: that the bank is licensed in your country and covered by a deposit guarantee.
In the European Union, deposits are normally protected up to 100,000 euros per person per bank, and other countries have their own limits. Check the rule that applies to you.
Keeping your account safe
Banks will never ask you for your full PIN or password by email, text or phone call. Treat any message that does as a scam. Keep your card and app login private, use a strong passcode, and check your statements regularly. Our guide to spotting scams shows the warning signs.
Your first steps
To open an account you usually need proof of who you are and, in many countries, proof of your address. Ask the bank exactly which documents it needs. Once your account is open, set up a small automatic transfer to savings on pay day, even a modest amount. Our savings goal guide shows how.
Watch and learn
Two videos explain how banks work and what the main account types are.
Video: “Banking Explained – Money and Credit” by Kurzgesagt – In a Nutshell, on YouTube.
Video: “Understanding Different Types of Bank Accounts | Beginners Guide” by Money Instructor, on YouTube.
Take it further
Reading is a good start. These options help you go from knowing to doing.
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A live session on Google Meet to turn this topic into your own plan. Book a session
Frequently asked questions
What is the difference between a current and a savings account?
A current account is for everyday spending and receiving pay. A savings account is for money you want to keep aside and may pay interest.
Is my money safe in a bank?
Licensed banks are regulated, and many countries protect deposits up to a limit through a guarantee scheme. Check the limit where you live.
Do I have to pay fees?
Some accounts are free and some charge monthly or card fees. Compare before you open one and read the fee list.
Can I have more than one account?
Yes. Many people keep one account for daily spending and a separate one for savings.
Where can I practise this?
In the free Mondosol lesson Money Matters: Banks and Accounts, which you can reach from this article.
Keep learning
- Course: Money
- Lesson (practise it): Money Matters: Banks & Accounts
- Read next: Set a Savings Goal and Your First Pay Cheque
- Related: Scams and Borrowing and Debt
Educational, not financial advice. The example numbers are invented, and this post contains no affiliate links. Mondosol is not a licensed financial adviser.
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