Choose a Checking Account
Before looking at checking accounts, there are some questions you may want to ask yourself:
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Fees
Just as with a savings account, there are fees associated with a checking account. Being aware of them will lead to smarter decisions when choosing which account to go with. When you go to a bank be sure to ask about these fees and how they can be avoided if possible.
- Monthly Service Fee: AKA maintenance fee, this fee may be applied every month or if the balance in the account drops below the minimum requirement.
- Per-Check Fee: A fee which may be charged when writing a check. Depending on the bank and account, this fee may be charged for each check, or after a certain number allowed per month.
- Check Printing Fee: You can attain more checks one of two ways; purchased through the bank or other companies. When you purchase from a bank, the cost of printing them is deducted from your checking account.
- ATM Use: Just like with a savings account, checking accounts incur a fee when using an ATM not associated with your bank.
- Overdraft Fee: AKA nonsufficient funds (NSF) fee. This fee is incurred when your check is “bounced” or returned to the person or company to whom it was issued. This occurs when the funds in your checking account are not enough to match the amount on the check.
- Returned Deposit Item: Similar to an Overdraft fee, this is charged when a fee you deposit in an account bounces.
- Stop Payment Fee: This is a fee which can be easily avoided. It is only incurred should you either lose your checkbook, or wish to prevent the bank from paying the check. In the second scenario, there is no guarantee it will be stopped in time.
- Phone Inquiry Fee: This is not a universal fee, only some banks will charge you should you call to check your balance or if a deposit has been cleared.
Types of Checking Account
Now that you’re familiar with fees, you can determine what to look for and what you want in a checking account.
- Low-Cost Checking: This account is perfect if you do not believe you will be writing many checks. It generally charges less than $5 a month as a monthly fee. The number of checks you write may be limited and going over the limit may incur a fee.
- Electronic Checking: This option usually comes at a reduced cost or is free if all of your banking is done by phone, ATM, or internet. It usually requires you to use direct deposit and may charge a fee if you use a bank teller. It generally offers unlimited check writing privileges.
- Regular Checking: A minimum balance is required in the checking account so as to avoid a monthly service fee. Generally, offers unlimited check writing privileges.
- Interest Checking: These accounts are interest-bearing accounts, two of which are the Negotiable Order of Withdraw (NOW) and the Money Market Deposit Account (MMDA). These accounts require a higher minimum balance to retain to gain interest off of them. Average minimum balance is $1,000 generally.