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7 Key Issues to Choosing a Checking Account

Checking accounts are not the same in every bank. Even within the same bank, you'll have a number of options for different types of checking accounts to choose from. Choosing the right checking account for your needs should involve a little comparison shopping across 7 key issues:

1. Are there any checking account fees and how much are they? Before opening a checking account with any financial institution, ask for a list of fees that are charged and what they are for. There are so many options for no-fee checking accounts that it's rarely necessary to open an account that will charge you fees. Potential fees could include:

  • monthly fee
  • check processing fee
  • teller fee (instead of using the ATM)
  • check bounced / overdraft fee
  • fee for receiving canceled checks
  • fee for checks

2. How much are you charged for using an ATM card associated with your checking account? Since ATM cards are used more often than checks for many people, it's a good idea to know what sorts of transactions will result in fees when you swipe the card. Fees almost always exist when using an ATM card in another bank's ATM (from both the other bank and your own bank); but keep an eye on fees that may result from using your ATM card at a retail location as a “debit” card rather than “credit”.

3. Does the account earn interest? Most checking accounts do not earn interest, but there are some that will pay interest on your balance. If you can find an interest-earning checking account, just make sure it doesn't compensate by charging you a monthly fee.

4. Will your account offer overdraft protection and how much will it cost? Most banks will honor checks you've written if they go over and above the amount of your current balance, as an emergency backup system. There is a fee for this service which is typically around $30 per transaction overdrawn.

5. Where are the banks located? If you are someone who likes to do most of your banking in person, you'll want to find out if the local branches of the bank are in convenient locations. If you do most of your banking online then it may not matter to you as much where the physical locations are.

6. Is online banking available? You would be hard-pressed to find a bank that doesn't offer online banking these days. There are even banks that automatically offer online banking services without a fee, which may be of interest to you if you plan to pay your bills online or schedule payments to pay automatically from your checking account. Make sure if the bank charges a fee for online banking you know whether it's a flat rate per month or per transaction to avoid any surprises.

7. What are the special deals for opening an account? Once you've addressed all of the other important concerns for choosing your checking account, the final decision among equally viable accounts may come down to what kind of special deals they're offering. If one bank offers a crockpot and another offers $100 to open a checking account, you can make your decision based on which you need more- an extra $100 or a crockpot!