Many people do the majority of their spending from a checking account. So it’s important that the checking account is convenient enough to meet your needs. When you’re evaluating checking accounts, here are some features to consider.
Fees
Checking accounts often have monthly or annual fees. The checking accounts with these fees may have more options and conveniences than free checking accounts. Free checking accounts are often very basic with little or no extra frills. Some checking accounts require you to maintain a certain average daily or monthly balance to avoid the fee. You may also be able to avoid the fee by making a certain number of debit transactions each month, by having at least one direct deposit, or by setting up a direct debit from your account.
Online Access
The ability to access your account online is critical these days. Not only can you check your account balance online, you can also review transactions and pay your bills directly from your computer. Some banks even have apps that can be used on s smartphone like an iPhone or Android device.
Location of ATMs/ATM Fees
If you ever need to pull cash from your account, having your bank’s ATM nearby is important. You’ll be charged an ATM fee for using an out of network ATM. In that case, both the foreign bank and your own bank could charge you a fee, though some checking accounts waive or refund fees for using another bank’s ATM. Most often, the banks that don’t have a lot of ATMs that will waive or refund a certain amount of ATM fees from out of network bank.
Interest Rate
The most basic, free checking accounts seldom pay interest on your balance. Typically, the types of checking accounts that pay interest on the balance also charge a monthly or annual fee. But these fees and often be waived by maintaining a certain minimum balance. Many checking accounts, that do pay interest, have tiered interest rate schedule where low balances earn at a low interest rate and high balances have a high interest rate.
Transaction-Based Fees
Watch out for banks that charge fees on debit card transactions (those made using your check card and a PIN) or checks. For example, your bank may charge a $.25 fee for each debit transaction you make using your PIN or for each check you write.
Overdraft Protection
If you bounce a lot of checks – never a good thing – you should choose a bank that offers overdraft protection. You may be able to link your checking account to a savings account or line of credit to pay overdraft transactions. Either way, you’ll incur a fee when you don’t have enough money in your checking account to cover a transaction.
Choosing a Checking Account
The best way to pick a checking account is to think about what you need from an account and make sure the account you choose meets your needs for a low cost.