How to Select a Checking Account
Selecting a BankSelecting a bank is not as simple as it was years ago because brick and mortar banks aren’t the only institutions offering checking accounts now.
Many of the large banking conglomerates have thousands of locations and when opening a checking account an individual may walk into one of these locations first because of their many convenient locations. While location and convenience are important, many times a customer will pay the price with higher fees and lower interest rates. If convenience and branch location is a top need then by all means consider one of the “big name” banks, however if saving money with low fees and higher interest rates are an agenda, considering shopping elsewhere.
Credit unions may be a good choice for many customers interested in personalized service and typically these institutions pay a slightly higher interest rate coupled with lower overall fees. Online banks tend to offer some of the best interest rates and low or no fee accounts, however, an individual will not receive the same face to face interaction they would at a bank with physical locations.
Once a bank has been selected, the next step of selecting a checking account is to look at the differences in accounts offered by that bank. The differences often come down to a few main areas.
Interest RatesAlthough interest bearing checking accounts are starting to become a financial product of the past, many banks still do pay a small amount. While interest should not be the deciding factor in how you select your checking account, the added reward is a benefit.
Account Minimum FeesWhen a banker displays account types they may try and push an account with a high minimum balance requirement. Typically these accounts will come with some benefits such as free checks or free overdraft protection service but involve leaving as much as $5,000 in the account at all times. This can be a lot of cash for some individuals to leave in an account that generates minimal interest income.
ATM FeesWhen selecting a checking account always inquire about ATM fees. Many banks will charge a fee for using the ATM of another bank and these can become a costly expense over time. This is particularly true for smaller credit unions that may not even have their own branded ATM’s for you to use at no fee. A great option for avoiding ATM fees is having a checking account with an online bank and because these institutions normally do not have banking locations they will typically not charge to withdraw money, and even reimburse the fee charged by the ATM. Alternatively, some individuals don’t need to access cash regularly and are okay with going to the bank once a week, meaning that ease of access to ATM’s shouldn’t factor heavily into their decision making.
By Jeffrey Glen