Choosing the right checking account is like selecting a wedding gift for your best friend; the number of choices can be overwhelming. Sometimes the differences between accounts are subtle, other times accounts vary in more noticeable ways that impact your time and finances. There are financial institutions in your hometown where you and your family may have banked for many years and are recognized as established customers. Banks in your college town often offer special low cost checking accounts for college students with services targeted to the needs of people your age. Some of these banks are very large with many branches and probably have one near where you live. Other banks are tiny and brag about customer service, making it a point to know their customers by name.
There are credit unions; some are related to your university, others may be one of the benefits of your job. Credit unions generally offer the same services as banks, and because they are member owned, rather than corporations, they often loan money at lower interest rates. Like banks, they federally insure the deposits of their customers. Then there are the online banks, such as ING or Fidelity Smart Money. Because they typically have less overhead than your bank, their low fee services can be very attractive, but they lack any kind of face-to-face service that some people desire in a bank.
Your life will be simplest if you have only one checking account and one bank.
The number of choices can be overwhelming when it comes to choosing the best checking account. The big fork in the road is determining how much customer service you need and do you really require a bricks-and-mortar bank, and if so, do you need it in the town where you live. Is it worth changing banks every time you move? If you are in college, have a job where you might be relocated, or if you are looking to move to a different area, this is an important consideration.
You many get convenience with the larger banks and typically more services are available. But often better customer service is received at the smaller banks. What is your typical schedule? Can you do your banking during your workday? Do you need your bank to be open on the weekend or evening? Do you need lobby service, or is drive-up banking acceptable?
It is essential to determine what specific checking account features you must have.
Once you have chosen a couple possible banks that appear to meet your needs, your next step is to determine what checking account features you need. Banks offer several different types of checking accounts. Most accounts require a minimum balance to open an account. Know how much money you need to open an account and how much must be kept in the account at any given time. Some checking accounts charge a monthly service fee if your balance falls below a certain dollar amount. Does your account offer unlimited check-writing, or are you charged for each check you write? Many checking accounts are interest-bearing. With interest rates being at an all-time low, and most people keeping a small balance in their checking account, seeking an interest-bearing checking account should be a low priority.
When opening your checking account, be sure about your first set of checks; ask how many you’ll receive initially and what is the charge for them. You probably want an account that gives you an ATM card. Be sure to know how the card works in terms of any hidden charges depending on the location where you use it, such as out of town or internationally. Additionally, your bank probably offers a debit card and maybe even a credit card. Ask about details for each of these cards. Overdraft protection appears to be an unnecessary feature if you manage your checking account responsibly and maintain a balance above zero; still, many people see overdraft protection as an essential checking account feature. Also, ask about fees if you stop pay on a check you’ve written. Be sure to inquire about other hidden fees for any checking account that you might open.
Putting your finances on automatic is essential.
Your life is very full and very busy, and anything that you can do to save time is a real plus. Going paperless and automating your finances as much as possible is essential. Two features that you must have in a checking account are direct deposit for your paycheck and 24/7 online bill pay. You will be saving time and saving trees, going green while simplifying your life.
Opening a checking account is actually a rather simple process. Find out where your friends bank and if they are happy with the services and fees. After deciding which bank is right for you and what checking account features you require, you are on your way to establishing a financial relationship that may serve you well for many years.
Debra L. Karplus, MS, OTR/L
Registered Occupational Therapist