Six Things to Consider When Choosing a Checking Account

A checking account is often the most important tool people use to manage their money day-to-day. It functions as a convenient hub for one’s personal finances – it is used to deposit a paycheck, pay bills, shop, withdraw cash and move money around to others. Most accounts offer different ways to access your money – like debit cards, person-to-person transfer, mobile wallet apps, ATM’s and even checks.

Checking accounts are not a “one size fits all” financial tool. Credit unions, banks and online financial service providers all offer checking accounts with a variety of different features. It may be hard to know which checking account is right for you with so many options to choose from. Comparing different types of checking accounts is an important first step. Look for one that suits your money management style and helps meet your personal finance goals. Whether you are opening your first checking account or looking for a new one, it pays to shop around.

To help you choose the checking account right for you, here are six things to consider.

1. Kind of Checking Account – Ask yourself what you want your checking account to do for you. Once you know, you can narrow down your search.
   1. Basic Checking – No bells and whistles. Just a tool to use to manage income and spending. Likely with a debit card and checks and does not pay interest. Can access service at a branch and ATM network.
   2. High Interest Checking – Helps you earn money on your money. Pays high interest on balances up to a certain amount. Often has requirements for direct deposit, debit card usage, electronic statements and more. Access to branch service and part of an ATM network. Often provides refunds for out of network ATM usage.
   3. Cash-Back Checking – These accounts pay a percentage in cash-back on purchases each month providing for added savings. These accounts can be part of a branch or online network.
   4. Online Checking – Account-opening, transactions and all interactions typically are automated with limited personal communication and service. No cash deposits. Often part of ATM network.
2. Ease of Access – How easy is it to access your money the way you want to access it. Is it important to you to have brick-and-mortar branches and ATMs near your home or office? If you travel, you may want a financial institution associated with a large branch/ATM network. Find out what kinds of policies financial institutions have about holding deposits before you can access funds.
3. Online and Mobile Features – If you like to manage your money online, make sure that the checking account you choose comes with a fully-featured website and mobile app. This is important if you enjoy the convenience of paying your bills, making a deposit, checking your balance, moving money between accounts, or sending cash to your friends, all from your phone.
4. Balance Requirements – Many checking accounts require you to maintain a certain balance to avoid monthly maintenance fees. If you don’t meet the balance conditions with these accounts, you’ll pay a monthly fee. If you do choose an account with a minimum balance requirement, be sure you meet the balance requirements to waive the fee. Otherwise, choose a “free” checking account with no minimum balance requirement.
5. Fees and Overdraft – You could face several types of fees with your checking account. Fees you will want to consider when choosing an account include overdraft fees, out-of-network ATM fees and foreign transaction fees.
   1. Overdraft Fees – Financial institutions typically charge $35 or more each time you overdraw your account. This can really add up. Many financial institutions offer free overdraft protection. You can also link your checking account to a savings account and have money transferred out of savings to checking to cover any overdrafts. Ask about options available and any potential charges.
   2. Out-of-Network ATM Fees – Most financial institutions have free ATM networks. However, if you use an ATM outside of that network, the provider can charge an additional fee. Many “high interest” checking accounts offer ATM refunds of up to $25 per month for use of out of network machines.
   3. Foreign Transaction Fees – If you travel outside the USA regularly, check to see what, if anything, the financial institution charges foreign transaction fees on debit card purchases.
6. Interest Rates – While checking accounts are not designed to hold large amounts of money for long-term goals, many checking accounts do offer high interest rates on balances up to a certain amount making them an excellent supplemental savings option. These accounts often have eligibility requirements to be able to earn the higher interest such as receiving electronic statements, minimum number of debit card transactions and recurring direct deposit each month. While the interest may be appealing, these accounts are not for everyone.

Whether you choose to open a checking account with a credit union, bank or online provider, you will want to make sure it is insured by either by the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Corporation (FDIC) on balances up to $250,000.

Town & Country offers several checking account options. Feel free to reach out to us anytime to discuss your money management needs. You can connect with us at info@tcfcu.com or 800.649.3495 to schedule time to talk with one of our member service representatives.