Course Catalog / BMU 040 / Lesson 3 of 5
BMU 040
Lesson 3: Banks, credit unions, and fees
Halfway review
1. What are the three budget steps?
See the answer
List expenses, list income, and subtract.
2. What does the CFPB say to cover first?
See the answer
Needs, then wants.
3. What is one change on your budget?
See the answer
One want you will cut or trim each week.
Why this matters
Where you keep your money can cost you. Some ways to cash a check or pay bills charge a fee every time. Over a year, small fees add up.
In this lesson you will compare a bank or credit union account with check cashing stores and prepaid cards.
Start with what you already do
You already compare prices at the store. Fees are a price too.
Common belief: Banks are only for people with a lot of money.
What is actually true: Many banks and credit unions offer low cost accounts. Bank On certified accounts must have a $25 or lower opening deposit and no overdraft fees.
In this lesson you will
- Explain how deposit insurance protects money in a bank or credit union
- Compare fees for an account, check cashing, and a prepaid card
- List the fees to ask about before you open an account
Key words
- credit union
- A not for profit group, like a bank, owned by its members.
- deposit insurance
- Government backed protection for money in an insured bank or credit union.
- overdraft
- When you spend more than is in your account. Some accounts charge a fee for it.
Your money is protected
The FDIC insures deposits at insured banks. It covers $250,000 per depositor, per bank, for each ownership category. The NCUA gives the same kind of coverage at federally insured credit unions. Members do not need to apply.
Compare your choices
| Choice | What to know |
|---|---|
| Bank or credit union account | Cashing your paycheck at your own bank or credit union is usually free. Some accounts have monthly or overdraft fees. |
| Check cashing store | Charges a fee each time. Fees vary, so ask first. No account to save in. |
| Prepaid card | Each card has its own fees, like a monthly fee or ATM fees. Read the fee list. |
Consumer.gov says direct deposit to your account gets you your money with no fees. The CFPB says to read each prepaid card's fee list.
Look for a low cost account
Bank On certifies accounts that meet national standards. For 2025 to 2026, a certified account has an opening deposit of $25 or less, no overdraft fees, and a monthly fee of $5 or less. Some can have up to $10 if there are easy ways to waive it. You can search for one on the Bank On website.
If a bank said no because of past banking problems, the CFPB says you still have options. Ask about second chance accounts.
Text version of this figure
Where to keep your money. Check the fees and the protection.
- Step 1, Ask about fees: Monthly, overdraft, ATM, and opening deposit.
- Step 2, Check for insurance: FDIC for banks, NCUA for credit unions.
- Step 3, Look for Bank On: Low fees and no overdraft fees.
- Watch out: Check cashing fees each time, and prepaid card fees.
- Pick the lowest cost: Set up direct deposit if you can.
Source: FDIC; NCUA; CFPB; Bank On standards (Oct 29, 2026).
Worked example: Luis compares
Luis cashes his paycheck at a check cashing store every two weeks.
- The store charges him $12 each time. That is $24 a month.
- He finds a Bank On account at a credit union with no monthly fee.
- He sets up direct deposit, so his pay goes in for free.
- He saves about $288 a year in check cashing fees.
Luis is a made up example. Fees vary, so always ask.
Practice: Add up the fees
Find the cost for one year. All fees are made up. Paid twice a month.
- Check cashing: $8 each check.
- Prepaid card: $5 a month, plus $2.50 at the ATM twice a month.
- Bank On account: $0 a month. Use ATMs in its network.
Check your practice: feedback
- $8 times 2 is $16 a month. Times 12 is $192 a year.
- $5 + $5 is $10 a month. Times 12 is $120 a year.
- $0. It is the lowest cost choice.
Common mistakes
- Opening an account without asking about fees. Ask for the fee list first.
- Thinking money in a bank is not safe. Check for FDIC or NCUA insurance.
- Giving up after one no. Ask about second chance accounts.
Try it: Compare your fees
Pick your scenario:
- I have a bank or credit union account
- I use check cashing or a prepaid card
- A bank told me no in the past
- Write how you get paid and how you pay bills now.
- Write what that costs each month in fees.
- Look up one Bank On account or a credit union near you.
- Write its monthly fee, opening deposit, and overdraft rule.
- Add any fee savings to your budget.
Do it by: this week
Reflect
How much do fees cost you each month now?
Check your understanding
1. Who insures money at a federally insured credit union?
- The NCUA
- The FDIC
- No one
See the answer and feedback
A is correct. Yes. Members are covered and do not need to apply.
B: The FDIC insures banks. The NCUA insures credit unions. Review Your money is protected.
C: Insured credit unions are covered. Review Your money is protected.
2. Max pays $10 each time he cashes a check, twice a month. What is his cost each year?
- $120
- $20
- $240
See the answer and feedback
C is correct. Yes. $10 times 2 is $20 a month. $20 times 12 is $240.
A: That is only one check a month. Review Luis compares.
B: That is one month. Review Luis compares.
3. What should you ask before you get a prepaid card?
- Which store sells it
- Its list of fees
- Whether it has a chip
See the answer and feedback
B is correct. Yes. Each card has its own fees.
A: Where you buy it matters less. Ask for its list of fees. Review Compare your choices.
C: A chip helps with safety but tells you nothing about cost. Ask for the fees. Review Compare your choices.
Takeaway: fees
- Ask about monthly, ATM, and overdraft fees
- Add fees for a full year
- Bank On accounts meet national standards
- Pick the lowest cost choice
Recap
- Bank and credit union deposits are insured up to $250,000 per depositor, per bank, per ownership category.
- Check cashing charges a fee each time.
- Read each prepaid card's fee list.
- Look for a low fee account, like a Bank On account.
You now have: a fee comparison and one low cost account to look at.
Next up
Next you will start an emergency fund. Go to Lesson 4: Start an emergency fund.
Sources
- FDIC: Understanding Deposit Insurance (current as of Oct 29, 2026)
- NCUA: Share Insurance Coverage (current as of Oct 29, 2026)
- Consumer.gov (FTC): Your Paycheck Explained (current as of Oct 29, 2026)
- CFPB: Prepaid cards (current as of Oct 29, 2026)
- CFPB: Bank accounts (current as of Oct 29, 2026)
- Cities for Financial Empowerment Fund: Bank On National Account Standards (2025 to 2026) (current as of Oct 29, 2026)
