1. Your money is safe in the bank.
The bank is probably the safest place your can put your money. The federal government insures money in your bank accounts for up to $100,000 per depositor ($250,000 until December 2009). Money in the bank is safer than cash, which can be stolen; and safer than investments, which can loose value.

2. Bank accounts are convenient, but that convenience will cost you.
Banks offer you quick, easy access to your money 24/7 via checks, ATM and debit cards, online transfers, and walk-up tellers. These services cost banks money, which they pass onto you in the form of low interest rates or account fees.

3. Money in bank accounts might not beat inflation.
Inflation is the gradual increase in what things cost over a period of time. Usually, inflation is between one and four percent per year. With many banks paying less than one percent interest on checking and savings accounts, your money saved may not hold its value over time.

4. You can “shop” for interest rates.
Banks charge different interest rates for different accounts, and rates can change frequently. You should continually shop around for the best interest rates and you’re your money where you’ll earn the best return. You can also choose between different banking products to earn higher rates.

Certificates of deposit (CDs) offer higher interest rates but require investing your money for between a few months and five years. Online high yield savings accounts and money market accounts offer better interest rates than regular checking and savings accounts but may limit how frequently you can withdraw funds or how you can withdraw funds. (Online accounts, for example, only let you take money out via electronic transfer or, sometimes, by ATM card).

5. Banking fees can add up.
Banks earn a big chunk of money by charging fees. The two most common are ATM fees and overdraft fees. You can avoid ATM fees by taking all the cash you’ll need for the month out at once, or by avoiding cash altogether using debit and credit cards. Overdraft fees—charged when you write a check for more than you have in your bank account—can cost up to $30. Avoid them by creating—and sticking to—a monthly budget or spending plan.

6. Banking online can simplify your life.
These days it’s possible to pay all of your bills without ever buying a stamp or writing a check. For the super-lazy, you can even set up all of your bills to pay themselves automatically (but do this carefully so you don’t end up with those overdraft fees that we just talked about).

This article is part of the series Banking 101.