Financial Fitness – Choosing the right checking account | Finance
If you’re like the vast majority of Americans, you need a checking account to pay your bills and manage your money. Perhaps you have recently moved to the area, graduated and started a new job, or realized that your current checking account does not meet your financial needs – you may be currently weighing your options to open a new checking account. .
Choosing the right account for you involves many factors, including how you typically make deposits, access your money, pay bills, fees charged, and more. Here are the things to consider when choosing the right checking account for you:
Minimum balances and service fees
Some banks institute minimum balance requirements, imposing service charges when these balances are not maintained. You may be responsible for maintaining a daily balance, where a fee is charged any time during the month that you fall below the required balance. Some banks calculate an average daily balance. This gives you a little more flexibility as your balance can drop below a set amount for a few days, but you won’t be charged a fee if the average balance for the month is above the minimum. Unless you receive a huge rate or perk, avoid accounts that charge fees for falling below the minimum balance.
Banks also charge fees for certain activities and services. The most common charge is for insufficient funds (NSF). This is charged when you write a check or make a debit card purchase for more than you have in your account. Of course, the best way to avoid these charges is to track your balance and only withdraw what you have; but we realize that life happens. The next best option is to set up overdraft protection where money is transferred from a savings account or line of credit you have at the same financial institution to cover the amount of the transaction so that your current account is not negative.
Practical services
People today are busier than ever. Most people are looking for a financial institution that offers products and services that allow them to bank on their own schedule. With the addition of weather and COVID outbreaks both of which cause branches to close unexpectedly, this only increases the need to be able to access your funds outside of a traditional branch lobby.
Some institutions charge fees for using convenient services such as the ability to pay bills online or withdraw cash from ATMs owed by another financial institution. Here are some handy services and what you should look out for regarding fees:
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Online and mobile banking lets you view account information, transfer between accounts, and even pay bills using your computer or smartphone.
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Mobile deposit lets you use your smartphone to take a picture of a check and deposit it into your account. If your employer doesn’t offer direct deposit, or you receive a lot of checks, this feature saves you time because you can complete this transaction anywhere, anytime.
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Debit cards allow you to make a purchase online or in a store with the amount automatically debited from your checking account. They also serve as an ATM for withdrawing money. Look for an institution that offers a robust network of ATMs for making free withdrawals or offers to reimburse you a fixed amount for fees that other banks may charge. You can also save on ATM withdrawal fees by using your debit card at the grocery store and selecting a cash back option.
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Electronic statements provide access to your monthly statement on the institution’s website. Electronic statements reduce paperwork and help prevent identity theft. Plus, if you need to retrieve past statements, they’re easily available at your fingertips to access on your computer, tablet, or phone. The cost of printing and mailing a monthly statement has increased dramatically for financial institutions. Many offer benefits associated with online statements. Worse still, some banks charge a fee to receive a paper statement. People no longer need to follow statements; if you need to look up information on a statement that’s several months old, it’s at your fingertips with your phone, tablet or computer.
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Each month, Financial Fitness covers topics to help you live a better financial future. Do you have a question for a future article on financial health? Email us at [email protected] and include the subject Financial Fitness.
Michael Patterson is the Chief Brand Officer for Horizon Federal Credit Union. With 30 years of experience in the banking industry, he has facilitated financial literacy workshops to help individuals with banking management, budgeting and career development.
