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Checking Accounts
Nearly everyone has a checking account because
it is a good place to park your money for
a short while until you are ready to spend
it. While bank checking accounts are the
most popular, there are a lot of ways that
checking accounts are structured, and many
times, your local bank will not have the
best deal for you.
There are four places to shop
when opening
a checking account:
Here are some considerations
to help you
find the best checking account
for you:
- FDIC insured. FDIC insurance protects your
money should the bank fail and should be
an absolute requirement for any bank checking
account you open. There are other types of
accounts offered by reputable banks that
offer the potential for higher returns (such
as tax free interest) or lower costs that
are not FDIC insured. These are not necessarily
bad, just be aware of your risk.
- Fees - study the fees
- The most common fees are charged on each
check that you write. Some accounts give
you a certain number of "free"
checks, then charge beyond that. Others offer
unlimited free checking. If you write lots
of checks, unlimited free checking with a
low interest rate may beat a high interest
account with per-check charges.
- Checks - the initial checks should be free.
If you get charged to reorder books of checks, you may find it cheaper to buy checks elsewhere
for use with your account.
- Some banks charge a fee for using an ATM,
even if it is one of their own. If you travel
a lot or want to use a different bank's ATM,
understand whether that bank and/or your
bank will charge a fee. If so, it might be
smarter to open an account with the other
bank.
- Interest - Some accounts give the best of
all worlds: high interest rates
and unlimited
free checking. See our guide
to Money Market Accounts for notes on High Value Checking Accounts.
- Minimum balance requirements - some account
require a minimum amount to open and maintain
the account. They may access fees if your
balance falls below the minimum.
Other features that you may want
for your
checking account include:·
- Ability to accept direct deposits of payroll
checks, Social Security benefits,
and even
dividend payments. This service
should be
free at most banks.
- Ability to set up automated debits to pay
utility bills, mortgage loans, insurance
premiums, etc. This is a way to save time
in writing checks, postage and possibly per-check
fees. Some banks charge for this service.
- Online banking - the ability to issue checks via the internet
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