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Keep Checking Accounts On Your SideThere are so many types of checking accounts. Some of them pay interest, but not much. Most of them do not pay any interest. Some of them charge you a monthly fee if your balance falls below a certain amount. Some of them charge you fees to open up the account. Some of them charge... .... Well you get the idea. If you are considering opening up a or changing a checking account, there are a few things I would consider: Rule #1 - Learn the choices of accounts (basic, interest-bearing, lifeline). Rule #2 - Think about how you will use the account ahead of time. Rule #3 - Understand the fees involved. Most checking have many different fees. Rule #4 -
You can't go wrong with Free Checking! (or can you?)
Here's where it can get complicated. A lot of banks out there have several types of checking accounts for you to choose from. They all have weird and complicated names, but you don't need it to be complicated. The easy way to get through it all is to remember these basic types of accounts: Basic Checking - These are the plain vanilla accounts. These are your best bet. They are for people who only need it to pay bills and cover basic expenses. And many of them now are FREE! As long as you get a debit card, you're in great shape with this. Interest-bearing Checking - You will need a minimum balance to keep this account, and there are so many fees involved. The bank may require an opening deposit of only $100, but you'll get killed for $25 a month if your balance slips below the minimum, even if only for one day during the month. And the interest is so minimal, you probably want to stay away. "Lifeline" Accounts - These are for lower income people, but mainly senior citizens use them. No minimum deposit and you're allowed a certain amount of checks a month. Very low monthly fees. The Bottom Line is to just look for some type of basic free checking. You may need as little as $20 to open up an account, and the fees are much less severe.
If this is your first time opening an account, you may want to think about how you're going to use it ahead of time. If you know that you aren't going to write a lot of checks per month, you may want to consider an account that charges you for each check written. Why? Because many of them offer incentives or benefits to offset the fee (and the fee is very minimal to begin with). On the other hand, if you write checks for everything in your daily life (food, gas, bills, etc), you're going to want to avoid any type of per-check fee. If you always have a lot of money in your checking account, the bank may waive your monthly fee. But if you're the type of person who keeps minimal amounts of money in your checking and your account varies often, then be careful! You don't want to end up getting hit with a big charge for going below your limit.
The reason why banks are able to offer much lower rates for maintaining checking accounts is because they're making so much money from your money through fees. The less money you keep in your account, the more your charged. Simple as that. Fees used to only account for only 14% of their profits; now it's more than 25% and growing. Banks are raising fees faster than inflation can catch up. Their income from fees have doubled over the past several years as the rate of inflation has been slow and steady in between 2 and 3 percent a year. Before you choose an account, make sure you know the following information: Minimum deposit to open the account Minimum balance needed to maintain to avoid fees How to get your fees waived (if possible) Cost per check Price of reordering checks ATM fees from their ATMs and other bank ATMs Fee for bouncing checks Write all this information down and compare it with all the banks and accounts you are considering.
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