It’s hard to resist a free gift. Many companies count on the fact that most people will feel better about what they’re doing if they get something for it. Whether it’s a free toaster, or an iPod gift card—banks and credit unions have used the “gift” tactic for a long time. They try to entice you to open an account with their lending institution by giving you something in return.
There is nothing wrong with getting something for doing business with someone. However, you should make your selection based on more than a free blender. If the best checking account for you happens to come with a free gift, then great, but make your decision wisely. Here are a few questions to consider, in order of importance, when looking for a checking account:
1. Do you have to keep a minimum balance in your account in order to avoid paying a monthly fee? Some “free” checking accounts require a minimum monthly balance, otherwise you could get stuck paying a small fee. The minimum may be based on your average daily balance, or you could get charged if your balance drops below the minimum even once during the month. Unless you are wealthy, you want to avoid checking accounts that require a minimum balance.
2. What type of ATM network does the bank or credit union provide? If you are a frequent visitor of the almighty ATM, then you want to make sure you are not going to be paying a fee to some other bank each time you withdraw cash. Your checking account is usually tied to a debit card, so you have to consider this factor as well. You can still choose an online bank, as long they refund your ATM fees, which many do.
3. How good is their online banking? Admittedly, this is hard to investigate before you get an account, but how quickly your transactions are updated online and the ability to move money between checking and savings can be real lifesavers. For instance, if I buy a coffee and bagel and sit down and log into a wifi spot, I can see the pending transaction before the coffee is cool enough to drink. With some banks your transactions may not show up online for up to two days. This can be real trouble if you rely on your online snapshot to track your current balance. A slow online posting time could result in overdraft fees at some point, which can easily be $35 or more per overdraft transaction.
4. Where are they located and what are their hours? We have all been placed on hold forever, or played “phone pad keyboard” where you press “7” then “3” then “4”, etc. until you finally give up or tough it out long enough to find out the office just closed five minutes ago (because you were pressing buttons for the last 10 minutes trying to get through). It would help if you could just walk into your bank or credit union branch if you have questions or issues. It would also help if they were actually open during hours that were convenient enough that you could actually get there without taking a day off from work. So when choosing a bank, look close to your home, work, or school.
5. Does the checking account pay interest? This is the last consideration since most people keep very little money in checking, and even accounts that do pay only pay a small amount. The other factors are much more important since the answer could mean tens or hundreds of dollars in a year versus the $5 to $20 you are likely to earn if the account does pay interest.
Asking these questions should help you choose the checking account that is right for you. And if you do happen to get a free piece of luggage with the right account, that’s great. Perhaps you can use it on the trip you’ll be able to take with all of the money you save on fees.
Interested in finding the credit card that is right for you? Let our Credit Card Finder help you take the first step.
Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them.