Compare Checking Accounts
Everyone needs a checking account. Most of us don’t think much about it. We just use the financial institution we’ve always used, or the one with the name we recognize. But you should take the time to compare your checking account to others and see what’s available. The differences in fees and other costs can be significant between checking accounts from competing banks. Of course, the way you use your checking account will be a key factor in which product is right for you. Here are the major factors to examine when you compare checking accounts.
Online Banking
Some banks charge for online banking and bill paying. This doesn’t make sense, as it can actually reduce their expenses. Regardless, it’s a great benefit to you to be able to bank online. You can see your balance at any given time, balance your checkbook and make transfers quickly and easily. If you are willing to rely solely on online banking and forgo a paper statement, some banks will reduce your service fees.
One of the best discoveries I’ve made is online bill payments. Instead of writing a check and mailing it, you tell your bank to do it for you. They pay the recipient electronically or if that’s not possible, they mail them a check. This is not the same as setting up automatic payments so that your electric company, insurance provider or health club can initiate payments from your checking account. You are in charge. You can go in each month and pay your bill online, giving you the opportunity to look over each bill and decide if you want to pay it. Many banks also offer the opportunity to set up automatic payments. One side benefit of online bill payment services is that they virtually eliminate the need for checks, envelopes and stamps.
Minimum Balance
When you compare checking accounts, make sure to find out what the minimum balances are. Sometimes that can be tied to the service fees or interest. For example, the checking account monthly fees are waived if you maintain a certain minimum balance. Just make sure that you don’t expect to fall below the required minimum balance. Also find out ahead of time what happens if you do fall below it. Everyone makes mistakes sometimes.
Interest
Some financial institutions offer interest bearing checking accounts. This can be a good idea if you usually keep a large balance in your checking account.
Fees
Most checking accounts come with a monthly service fee, but it can often be waived if certain conditions are met. The most common requirement for a free checking account are regular automatic deposits and/or going paperless. All financial institutions charge fees for extra services. Examples of these are non-sufficient funds fees, teller fees and wire transfer fees.
ATMs
Although plastic can be used almost anywhere these days, you’ll still need access to ATM machines sometimes. You should get a checking account at an institution that has ATM machines in places that are convenient for you – maybe near your home or work. If you travel frequently, you’ll want to be able to access an ATM when you’re on the road.
Insurance
Checking accounts are available at banks, savings and loans, credit unions and other financial institutions. Find out whether the checking account you are considering is insured by the FDIC or some other government agency.
Overdraft
If you’ve been overdrawn on your checking account in the last year or so, you need to ask what happens if there are insufficient funds in your account. Some banks will allow you to cover the balance from your savings account. Some will set up a line of credit for this purpose. You need to know what the plan is and how much it would cost you.