If you are new to banking—or have lived in countries where the banking system is untrustworthy—you might be wondering why you would want to use a bank at all. It’s certainly easier than ever to get by without a bank account.
Prepaid debit cards make it possible to shop online and in stores—and even pay bills and withdraw money from ATMs—just like someone who has a bank account. The IRS will deposit your tax refund to a prepaid debit card and many employers will load your paycheck onto one (though this option has many drawbacks).
KEY TAKEAWAYS
- Banks are financial institutions that accept deposits and lend money.
- Many people wonder, given the advances in technology today, if a traditional banking account is really necessary.
- Online payment systems like PayPal can be used to send money, while prepaid debit cards are often used for online shopping or to withdraw money from ATMs.
- Advantages of using bank accounts are security, convenience, and the potential availability of other investment options.
- Some online-only banks charge less in fees and offer higher interest rates compared to traditional brick-and-mortar banks.
Online services like PayPal and Venmo let you send and receive money without a bank account. You can also operate on an all-cash system by cashing your paycheck at Walmart or a check-cashing store, then paying your bills in person at a Walmart Money Center or at a check-cashing store.
However, if you meet the basic qualifications to open a bank account, you might appreciate the many benefits of a bank, starting with keeping your money more secure.