Choosing a Checking Account

Choosing a checking account

Now, you select a checking account. Not too long ago, before there were so many different kinds of checking accounts, you might have signed up for the one, and there was probably only one. It would be at the financial institution your family used or the one closest to your home. From then on, you transacted most of your financial affairs, ranging from taking out mortgages to buying Certificates of Deposit, with that one bank or credit union.

Today, such behavior would be considered financially naïve. Choosing a checking account involves comparison shopping. And where you open it does not necessarily mean that is where you will conduct most of your other financial transactions.

The accounts you review will be both housed in brick and mortar and those only existing on the Internet. Bankrate.com provides some of the information you need. Also, you can search on the web, using keywords such as “choosing a checking account.”  Essentially, for your decision, you have to focus on:

Fees, and what they pertain to

Is there a monthly maintenance fee? Will there be a fee if your daily balance dips below a certain figure? Is there a fee for each overdraft covered and how much?  Online accounts, because there is not the expense of a physical presence, usually have lower, fewer, or even no fees.
Interest rate. Some accounts provide no interest. Some provide a relatively high introductory rate and then that drops significantly. Often online accounts provide the best interest.

Restrictions

Some require a minimum daily balance. Other restrictions might be on the number of free checks allowed to be written and no communication with live human beings as with online accounts. You may be the type of person who needs face-to-face contacts for your financial matters.

Free access to ATMs and reimbursed fees

Those who travel need to know what ATMs they can use for free. Therefore, they want an account with a financial institution which has a national presence and/or partnerships with other ATM providers. If it does not have that then you need to find out if it refunds your transaction fees on out-of-network ATMs. Those can run up to $3.00 a transaction.

The best deal is the one which is the best fit for your needs. A high interest rate which requires a high daily balance is not for you if your cash needs fluctuate unpredictably. And the best deal for you will determine what financial institution you go to for the account. The trend now is against one-stop shopping. You might do business with several different financial institutions for a savings account, Certificate of Deposit, mortgage, and business loan.

However, to provide overdraft protection, usually without paying a fee, you would also open a savings account at the same bank or credit union. You would have that linked to your checking account. In addition, some business customers who will be taking out bridge and longer-term loans would find it makes sense to build a relationship with one financial institution. Having all their accounts there could give them greater negotiating power, especially in refinancing a loan during hard times.

As more kinds of checking accounts are developed, you might want to transfer to that one and close down the present one. That can be done fairly easily if you have arranged with the financial institution to handle all your electronic deposits and payments. That way everything is centralized and you do not have to notify each party of the change. No longer do you have to be “locked into” a checking account.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s