A Checking Account
A checking account is useful if you have bills to pay, such as telephone, rent, electricity, cable and gas, and would like to use your checking account to make purchases. Having a bank checking card allows you to better manage your money, as every transaction you make on your account is recorded. Checks deposited in your account will take between 1 and 21 business days to clear. If you have direct deposit, your employer can deposit your paycheck directly to your bank account every time you get paid. Your salary will be available to you immediately once it has been deposited by your employer. For direct deposit arrangements, speak with your employer. Banks offer a variety of checking accounts based on the number of checks you write per month and how much money you usually have in your account. With a checking account, you can order personalized checks for a fee. Government also charges 10 cents stamp duty or tax on each check and the banks are required to issue your checks with the legend “stamp duty paid 10 cents” printed on the face. Writing a check is like an IOU. When you write a check, you’re asking the bank to take money from your account and give it to someone else. Banks will usually charge a monthly fee to maintain or service your checking account. Some will allow you to issue a maximum number of checks or transactions each month without any fees being deducted from your account. Some banks will pay you interest on checking. Interest is usually calculated on the minimum monthly balance. These arrangements vary from bank to bank. Banks may impose a service charge if your balance falls below a certain minimum amount. Banks will also charge you a fee if you write a check without having enough money in your account to cover the amount. Banks will automatically charge your account because of the cost to return the check. Always, make sure you have written your check correctly; some banks will not honor checks if they have incorrect information on them.
Some banks offer overdraft protection that allows you to spend more money than you have on your account, but you may be charged a hefty fee if you use this service. Be sure to keep track of your account balances and avoid writing bad checks or having to pay overdraft fees. A bad check is often referred to as an NSF check – non- sufficient funds check, bounced check, or dishonored check, or a rubber check. Bad checks will not only cost you, but will damage your relationship with the person or business to whom you wrote the check. Some businesses in the BVI will further embarrass you by publicly posting your name as someone who issues bad checks.
The bank will issue you a card with your name and number and an expiry date. A three digit security number will also be printed on the back of the card. When you are making purchases with your check card on-line or over the phone they will usually require the card number, expiry date and security number. If your checkbook or check card is lost or stolen, you should immediately report it to your bank to minimize your liability for unauthorized purchases.
Each month, the bank will send you a checking account statement. This statement shows your account activity for the past month. Most banks in the BVI also allow you to view this statement on-line. If you see an error in your financial statement or an incorrect transaction on your account on-line, report it to your bank immediately.
You may also be able to link your account with the same bank in another jurisdiction. If you have a bank account in the United States, you may be able to link your U.S. bank account to your BVI bank account (if it is a U.S. bank) so that you can transfer money easily between accounts, usually free of charge.
A savings account is where you stash your money for a rainy day or for some future purchase. Remember, it’s safer to put your money in the bank than putting it under your mattress. And this time, the bank will actually pay you to keep your money for you by giving you interest on a monthly basis. A savings account that earns interest can make your money grow. Interest is usually compounded annually. That means if you deposit $1,000 in your savings account and you don’t touch it for three years and the bank is paying you 3.0 percent interest annually to keep your money, at the end of the first year you will have $1030. At the end of the second year you will have $1060.90, and at the end of the third year you will have $1092.73. Your money would have grown by $92.73 after three years.
Your money grows faster, the higher the interest rate, the more often it is compounded and the longer you keep it in your account. Interest is usually calculated on a minimum monthly balance. Interest can also be compounded daily, monthly, quarterly or annually. The more often interest is compounded, the faster your money will grow. These arrangements vary from bank to bank. To make sure you get the best deal, compare APYs or Annual Percentage Yield, not the interest, which each bank offers on savings accounts. Some banks, however, require that you keep a minimum amount of money every month in your savings account or else they will charge you a fee. Some banks have a limit on the number of times a month that you can withdraw money from your savings accounts.
To decide what type of account is right from you, you should request written information on the accounts you are being offered and carefully review the information before you choose which type is best for you.
Certificate of Deposit
With a Certificate of Deposit (CD) or fixed term deposit you agree to leave your money for a set period of time, such as six months or five years, or whatever the term of the CD. The longer you promise to keep your money in the account, the higher the interest rate. There is a penalty for withdrawing your money before the term ends. So if you know you will need your money in seven months, you shouldn’t put it in a one-year CD; a six-month CD might be a better option. The penalty for early withdrawal could be up to three or six months of interest.
Somebanks offer custody accounts and brokerage services, allowing you to buy stocks and bonds on any stock exchange in the world.
A Club Account is an account you join to save money for a special reason, such as a holiday, Christmas, family vacation or college. These accounts usually require you to make regular deposits. The banks in the BVI offer a variety of these types of accounts.
A Money Order is similar to a check. You can use a money order to pay bills or make purchases where cash or checks are not accepted. Banks sell money orders for a fee which varies from bank to bank.
Wire transfer is the ability to move money from one bank to another. Most banks can send money to banks outside the BVI. When sending a wire transfer, you will need the name and address of the account holder, the bank’s RTN – routing transfer number and location, and the account number to which you want to wire money. In addition to the amount of money that you are sending, you will have to pay a fee for the wire service. Be sure to ask about the currency exchange rate and all fees charged. The bank receiving the transfer may also charge the person who gets the money.
Using the Bank outside of the Bank
For most banks in the BVI, you don’t have to be inside the bank to use its services. You can use the bank outside of the bank. Most BVI banks have ATMs or automated teller machines, which are computers that do the work of a bank teller. You can use your ATM or debit card, which is issued by the bank with your PIN or personal identification number. ATMs allow you to make a deposit, withdraw cash from your account, transfer money from one account to another, and do a balance inquiry. Most banks have ATMs at their branch locations that are available 24 hours a day. Some have ATMs located at various locations throughout the BVI, such as outside supermarkets or at the airport or other highly trafficked areas. You can use your debit card at any ATM, but using an ATM that belongs to another bank could cost you from about $2.00 to $4.00.
Be sure to note that there are differences between an ATM Card, a Debit Card, a Checking Card and a Credit Card. They may look alike, but do not necessarily have the same functions. For example, an ATM card allows you to withdraw cash from your account at an ATM machine but may not be used to make purchases at businesses as you can with a Debit, Checking or Credit Card. When you make purchases with a Debit or Checking card, the money is immediately removed from your account. With a Credit Card, you take a loan, that is, you can buy now and pay later.
Some banks still issue a passbook, which is a small record-keeping book that you take to the teller whenever you go to the bank and the teller records your transactions and the most recent balance on your account.