Essential Things You Should Know Before Opening a Checking Account
Opening a checking account is one of the basic first steps to manage your personal finances. Whether a student, young professional or one looking into an easier path of banking, having knowledge about checking accounts can prevent you from incurring headaches and even unexpected fees. Here's everything you need to know before you walk into a bank and sign up online.
What You Get with a Checking Account
This is for your typical financial transactions on a day to day basis. It usually includes a few personal checks furnished for your use when paying bills or buying goods. You are also given a debit card and ATM access, both of which you can use to take cash out or make purchases in-store or online. With these tools, a checking account becomes the go to place for day-to-day consumer spending and other routine transactions.
Potholed Free Online Checking Accounts: Look Out
Your best choice right now is the free online checking account. In addition, these accounts allow you to withdraw funds as many times as possible; thus becoming the right choice for digital-age money managers. But banks with free checking usually have caps on what you can pull out from ATMs every day or each month.
How to examine your spending patterns when considering an online free checking account? Ensure that the ATM withdrawal limits imposed by the bank are in line with how you really use your money. A free online account may not suit you if you're often on the go making big cash withdrawals.
Checking Account Interest Rates: Do Not Expect Much
If you want to earn interest, checking accounts are not the best option. Unlike savings accounts or certificate of deposits, most checking account pay next to nothing — if any interest at all — on the cash you have in them. Nevertheless, there are also checking accounts offering a staggering high of 1 percent interest.
This is a start—to be sure—but it still pales in comparison to what you could earn from other accounts. If accumulating wealth is important to you, then consider coupling your checking with a high-yield savings account.
Monthly Maintenance Fees Can Be Expensive
New account holders will be shocked by the monthly maintenance fee. These national banks, many well known and highly favored by customers charge up to 15 dollars a month just for maintaining your account open. So, flush with cash from these fees banks are able to keep their thousands of branch offices open nationwide.
The charges can still add up pretty quickly if you are a customer who fails to meet the bank's requirements for waiving debit-related fees, such as maintaining certain minimum balances. Make sure you always read the small print, and the specific requirements that need to be met in order for these fees not apply.
Online Checking Account Could Be the Better Option
An online checking account is often a smarter bet if you want to waive monthly maintenance fees and are not reliant on access at your bank branch. In fact, there are quite a few online banks that provide free checking accounts with no monthly fees and no overdraft charges. As such, they are perfect for consumers on a budget who want to keep track of their finances from the comfort of their phone or computer.
Final Thoughts
Selecting the best checking account is based mostly on how you live, your spending habits and financial goals. Research the options, read through the terms and choose an account that meets your needs without needing to pay for extra features. With a carefully selected checking account, tracking your finances can be both easy and cheap.
