Opening a checking account is an important financial milestone. Aside from not having to use cash everywhere, checking accounts allow individuals to pay bills, keeps their money secure, is a great budgeting tool, and provides individuals with the convenience of a debit card.
However, many individuals don’t know what to look for in a checking account. With that said, before racing to open up your checking account, here are 5 things to look out for in a checking account.
1. Bank Reputation
When you open up a checking account, you are building a relationship with the bank. This means that the bank’s reputation is important.
The last thing that you want to do is go with a bank that was dishonest about fees and offers little customer support.
For instance, does the bank do a good job of resolving issues? Or, do you find that many customers have issues when interacting with the bank?
Though a checking account has many benefits, it doesn’t matter if you are not supported by a bank that will make your experience with them easy.
Additionally, it’s important to note that there are often fees accompanied by closing your bank account. If you are not satisfied, you must be prepared to come out of pocket.
2. Monthly Fees
Most banks carry monthly fees for having a checking account with them. However, all banks are not created equal and some banks carry more fees than others.
If you want to open up a checking account, it’s important to see what kind of fees are associated with the account so that you can be financially prepared.
Some banks offer great incentives such as cashback on purchases and fee waivers for individuals who meet certain guidelines.
Those are the banks you’re going to want to focus on. If a bank has too many fees, this can make you lose money in the long run.
3. Bank Insurance
Nearly all banks are insured by FDIC. However, the FDIC does not insure all accounts. The good news though, a checking account is covered by the FDIC.
The type of accounts that the FDIC insures include Negotiable order of Withdrawal, Money Market deposit accounts, checking, savings, and CD accounts.
With that said, it’s important to know whether your checking account will meet the FDIC coverage requirements. Checking accounts are insured for up to $250,000 per account.
Additionally, they cover depositors’ accounts at each insured bank including principal and any incurred interest up to the insurance limit.
However, the FDIC does not insure money that is invested in things such as stocks, bonds, mutual funds, and life insurance policies.
4. Accessible ATMs
Another thing to consider when opening a checking account is accessible ATMs. There are instances where you may need to pull money off of your checking account and you want to know that your bank has ATMs conveniently located.
If you plan to withdraw from your checking account often, then it’s best to consider getting a checking account with a bank that is well-known. Larger banks generally have ATMs situated throughout certain areas whereas locally-owned banks may only have a few.
5. Minimum Balance for Checking Accounts
Depending on what bank you choose and the type of checking account you open, there will be a minimum balance that you need to deposit. Similarly, there are a variety of banks that offer free checking accounts.
Before deciding your check account, be sure to know whether they require a minimum balance.
If it isn’t something you’re comfortable with, then you may want to look for free checking accounts or save your money to afford the deposit.
Each bank has their own guidelines when it comes to opening a checking account. Before making a decision, be sure to consider what your goals are for your checking account, what each bank is offering, and your current financial needs. This will help you decide which account is ultimately right for you.