A checking account is for daily spending — paying bills, buying groceries, ATM withdrawals. It usually earns little or no interest. A savings account is for money you do not need immediately. It earns interest and federal law limits you to 6 withdrawals per month. Best practice: keep 1-2 months of expenses in checking for bills and keep everything else in a high-yield savings account earning 4-5% interest.

The Federal Deposit Insurance Corporation (FDIC) insures your bank deposits up to $250,000 per depositor per bank. If your bank fails, the FDIC guarantees you get your money back up to that limit. This has happened — over 500 banks failed during the 2008 financial crisis. Always make sure your bank is FDIC insured. Credit unions have similar protection through NCUA insurance.

A credit union is a non-profit financial cooperative owned by its members. Because they are non-profit, credit unions typically offer higher savings rates, lower loan rates, and fewer fees than banks. To join you usually need to meet membership requirements (work in certain industry, live in certain area, etc). Popular credit unions: Navy Federal (military families), Alliant, PenFed. Deposits are insured up to $250,000 by NCUA.

Overdraft protection links your checking account to a savings account or credit card. If your checking balance hits zero, the bank automatically transfers money to cover the transaction instead of declining it or charging a $35 overdraft fee. Some banks charge a small transfer fee instead. Turn on overdraft protection to avoid the $35 fee, but address the underlying issue of spending more than you have.

A wire transfer is an electronic transfer of money between banks. Domestic wires typically cost $25-35 to send and arrive same day. International wires cost $35-50 and take 1-5 business days. Wire transfers are irreversible — once sent you cannot cancel. Never wire money to someone you do not know personally — wire fraud is the most common financial scam. For large transfers consider ACH (free, takes 1-3 days) instead.