Managing your Money During College Part 4: Withdrawals and Spending

In this article, we discuss withdrawing and spending money from your bank account.

By Ian Whitmore — March 10, 2023

Managing your Money During College Part 4: Withdrawals and Spending

In previous articles in this series, we discussed choosing a financial institution to store your money. We walked through setting up a bank account and laid out some tips for depositing money into your account. In this article, let's talk about withdrawing and spending money from your bank account and discuss ways to spend money from your account, including debit cards, checks, and bank transfers.

Getting Money Out of Your Account

Let's start with withdrawals. Although you can spend money directly from your account, there may be times when you need to get money in the form of cash out of your account. Some businesses or transactions may be cash-only, though this is becoming increasingly rare. Some people find it easier to visualize their budget by using cash for certain purchases, such as food. Perhaps you want to keep some cash on hand in case of an emergency or unexpected expense.

As I mentioned in a previous article, checking and savings accounts typically have different regulations regarding how frequently you can withdraw cash. Typically, you can withdraw money from a checking account as frequently as you want, while savings accounts may impose a cap on penalty-free withdrawals. Check with your specific financial institution to see what their rules are.

Withdrawing Cash

There are three main ways to withdraw cash from a checking account:

ATM Withdrawals

First, you can use your bank/debit card to withdraw cash from an ATM. This is a reasonably straightforward process similar to using a gas pump or vending machine. Some ATMs charge withdrawal fees on top of the money you withdraw, however. Although the fees are usually relatively small, they can add up if you make a lot of withdrawals. Your bank should have a list of the in-network ATMs that don't charge fees to bank account holders.

Using Checks to Withdraw Cash

Second, you can write a check for cash. Fill out the check normally. On the "payee" line, simply write your name. You could write "Cash" instead of a name. Note that if the check is lost or stolen, it can be cashed by anyone who has possession of it. Take the check to the bank and cash it normally (you will most likely need to provide your valid ID).

Withdrawal Slips

Finally, you can fill out a withdrawal slip (your bank branch will have withdrawal slips available) and submit it to the teller with your valid ID. The teller will process the slip and give you the cash. A withdrawal slip is similar to a deposit slip and requires you to fill out basic information about the amount of cash you need, your bank account number, and so on.

Spending Money Directly from Your Bank Account

Although you may need or want to use cash for some purchases, you will generally find it more convenient to spend money directly from your bank account. There are a few ways to spend money from a checking account. Some of these methods may also work for savings accounts, but generally, you will need to transfer money from a savings account to a checking account before spending.

Debit Cards

When you open a checking account, your financial institution should provide you with a debit card. Debit cards look like credit cards and physically operate much the same way. However, debit cards and credit cards function differently behind the scenes. A credit card draws money from a "line of credit" extended to you by the credit card company.

The money spent comes from the company, which keeps a tally of how much you spend using the credit card. Later, you use your own money to pay back the company for the money you spent using the card. A debit card, on the other hand, spends money directly from your checking account. Your bank will keep a tally of the purchases made using your debit card, but you won't have to pay the bank back since the money already belongs to you. The one exception to this can occur if you spend more money than you have in your account.

In some cases, your card may decline. In others, the purchase may go through, and your account will go negative and "overdraft." In such a case, you will need to add money to the account to bring it back to a positive balance. Banks do not appreciate it if you let your account overdraft, and there are often fees associated with overdrafting your account. Check with your bank to make sure that you understand their policies surrounding overdrafting your account.

Paying with Checks

Although checks may seem antiquated, there are some situations in which they can be useful. For example, some landlords may want you to pay using a check, which can be a secure way to conduct large transactions. You can buy checks from your bank for a small fee. Checks typically come in a small book, although it is possible to buy smaller numbers of checks, known as "counter checks," in sheets of three to six. To write a check, fill out all the front of the check. The process should be self-explanatory, and you can always look up examples of written checks online.

On the line that says "Pay to the order of," you will write the name of the person or business to whom you are writing the check. If you aren't sure what to write, ask the person to whom you are giving the check, and they should be able to tell you. Checks, like debit cards, draw money directly from your checking account. However, the money won't be taken out until the check is cashed. Make sure to keep a record of your written checks so that you aren't surprised when money suddenly disappears from your account. As with debit cards, be sure you have enough money in your account before you write a check to avoid fees, hassle, and possible criminal prosecution.

Bank Transfers and Bill Pay Systems

Thanks to modern technology, many payments are now made through online bank transfers. For example, you can pay for things such as rent, insurance, phone service, utilities, and credit card bills through a bank transfer. In this case, you will follow the instructions provided by the service provider. Usually, they need your bank account and routing number. Peer-to-peer payment services, such as Venmo, can also be connected to a bank account and used to spend directly from your bank account. Be careful when using bank transfers to ensure your account's security, and talk to your bank if anything seems fishy.

Final Thoughts

Hopefully, this series of articles has educated you more about the banking system. Don't be afraid to ask others for help. Although finances may seem overwhelming, learning a little about the financial system will help you greatly during college and beyond!

Ian Whitmore

Ian Whitmore

Ian Whitmore was born and raised in Austin, TX and spent his childhood and teen years immersed in the rich cultural scene of Austin and the beautiful landscapes of the surrounding Hill Country. He graduated from Wyoming Catholic College in 2020 with a B.A. in Liberal Arts.
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