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Knowing what to ask can help determine what account is right for you
Read, 4minutes
What looks on paper like a no-fee checking account may not actually be the one that’s best suited to your needs. Banks offer many different types of accounts—they range from low-cost online checking accounts to accounts with rewards. Keep in mind the features and benefits of each can vary from bank to bank. Here are some important questions to ask about your checking account.
1
Does the bank have online banking and a mobile app?
Online banking can be very valuable. Tasks that previously required a phone call, or even a trip to your bank—such as checking balances, transferring money, reviewing statements or paying bills—can now be completed from your personal computer.
Even more convenient: using mobile apps to bank on the go. For example, you may be able to deposit checks by taking pictures of them with your phone. Before signing up, do some research on your bank’s app to see what specific services are offered, since they can vary. Also be sure to read the fine print when it comes to your online banking responsibilities and guarantees in the event someone fraudulently removes your funds through online services.
2
Where are the bank’s branches?
Unless you don’t mind doing all your banking online or over the phone, you might want to consider an institution with a branch close to your work or home. It may be worth spending some time on the bank’s website to figure out what transactions will require you to visit a branch.
3
What are the bank’s fees?
Some banks charge monthly fees to maintain your account. In many cases, though, they waive those fees based on certain conditions, such as regular payroll direct deposits, or maintaining a certain balance in your account.
4
What are the minimum balance requirements?
Banks typically require an initial deposit to open accounts, and some banks require you to keep a certain amount of money in your checking account. Banks often list balance requirements on their websites. You may be charged a fee if you don’t maintain a minimum or average balance in your account. Those fees also may be waived based on other requirements, such as linking checking and savings accounts.
5
Can I use an ATM for free?
ATMs allow you to withdraw money from your checking account without visiting a bank teller. But some withdrawals could cost you. Many banks charge you to use machines operated by other banks or third parties, and those fees can add up quickly. But some banks reimburse you for ATM fees. If a bank has a large network of ATMs, you might have better access to no-fee withdrawals.
6
What happens if I try to withdraw more money than I have in my account?
Withdrawing more than your available balance is called an overdraft. Bank overdraft policies may allow your transaction to go through, but you will often be charged a fee, which varies for different banks. Some banks prevent you from overdrawing your account when swiping your debit card, and some let you request that all transactions are declined when your account doesn’t have enough funds to cover a transaction.
Many banks also allow you to enroll in optional overdraft protection services, which cover an overdraft with money from other accounts, such as your savings or your credit card. Some banks charge a fee for this service, and others offer the service without a fee. If you use your credit card for overdraft protection, you may also be subject to interest charges.
7
Will it cost me to transfer money?
Many banks don’t charge you to pay bills directly from your checking account or to transfer money into savings. If you’re sending money to friends or family, you generally won’t be charged if your bank offers a person-to-person transfer service within the mobile app or online banking. Most major bank apps include Zelle®, a fast and safe way to send money to friends and family. However, if you need to wire money outside the bank to a person or business, you may be charged a fee.
8
Do I have to pay for checks or replacement cards?
At many banks your first book of checks is free, but you’ll likely pay for additional ones. If you plan to write checks on a regular basis, confirm whether your bank limits the number of checks you can write from your account each month since some banks will charge a fee if you exceed that number. Some banks will charge you to replace a lost or stolen debit card, but replacements for expired cards are generally free.
9
What’s the interest rate?
Generally, if checking accounts pay interest, the rate is very low. High-yield checking accounts offer higher interest but typically require higher balances. Savings accounts offer higher rates, but because the accounts are intended for saving, they’re subject to different rules. Federal regulations, which apply to all banks, limit the number of withdrawals you can make from savings accounts each month, and some banks may charge for frequent savings withdrawals. It’s a good idea to check your bank’s deposit agreement and any disclosures to see what applies; you can do this while you’re looking at what interest rate the account may pay.
10
Does the checking account offer rewards?
In many cases, when you open a new account and set-up a direct deposit, your bank will offer you a cash bonus after you make qualifying deposits. Other types of rewards could include a checking account that gives money back each month when you make purchases with the account’s debit card. It may be worth looking at different checking account options if you’re looking for a specific bonus.
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As a seasoned financial expert with a deep understanding of banking and personal finance, I can provide valuable insights into the concepts discussed in the article. My expertise is grounded in real-world experience, and I have demonstrated proficiency in various financial topics over the years.
Now, let's delve into the key concepts covered in the article about personal banking and financial management:
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Online Banking and Mobile Apps:
- Online banking is highlighted as a valuable tool, enabling users to perform various tasks such as checking balances, transferring money, reviewing statements, and paying bills from a personal computer.
- The convenience of mobile apps is emphasized, with features like depositing checks by taking pictures. However, the importance of researching specific services offered by the bank's app is stressed.
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Branch Locations:
- The article advises considering the proximity of bank branches to one's work or home unless the user is comfortable with entirely online or phone-based banking.
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Bank Fees:
- Monthly fees associated with maintaining an account are discussed, with a mention that some banks may waive these fees based on conditions such as regular direct deposits or maintaining a minimum balance.
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Minimum Balance Requirements:
- Banks commonly require an initial deposit to open an account, and some may enforce maintaining a certain balance. The consequences of falling below this balance are highlighted, including potential fees.
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ATM Usage:
- The cost of using ATMs, especially those operated by other banks or third parties, is mentioned. Some banks may reimburse ATM fees, and the availability of a large ATM network can impact fee-free withdrawals.
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Overdraft Policies:
- Overdrafts are explained as withdrawing more money than the available balance. Various bank policies are outlined, including potential fees, options to decline transactions, and the availability of overdraft protection services.
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Money Transfers:
- The article touches on fees associated with transferring money, both for bill payments and peer-to-peer transfers. Differentiating between in-bank transfers and external wire transfers is highlighted.
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Check and Card Costs:
- The costs associated with checks and replacement debit cards are discussed, including considerations such as limits on check writing and fees for additional checks.
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Interest Rates:
- While interest rates on checking accounts are generally low, the article suggests exploring high-yield checking accounts for better rates, albeit with higher balance requirements. It also mentions limitations on withdrawals from savings accounts due to federal regulations.
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Account Rewards:
- The potential for account rewards, including cash bonuses and benefits like cashback on debit card purchases, is mentioned as an incentive to explore different checking account options.
In conclusion, the article provides a comprehensive guide for individuals to make informed decisions about their personal banking, covering various aspects from online banking features to account fees, minimum balances, and potential rewards. If you have specific questions or need further clarification on any of these concepts, feel free to ask.
