Checking accounts are a convenient way to manage your balance, but not all checking accounts are created equal. If you are fed up with your current checking account or want to open an account for the first time, there are a few things to keep in mind.
How to choose a checking account: 7 factors to consider
If you’re wondering how to choose a checking account, ask yourself these questions to determine which account is right for you:
1. Can you sacrifice convenience for lower fees and higher APYs?
One of the most important decisions you need to make is whether you want a traditional brick and mortar bank or whether you are willing to keep your money in an online checking account.
While there are several key differences, whether you need personal assistance and how much interest you want to earn really depends on your convenience with an online-only bank. Online banks tend to offer much higher APYs due to their lower overhead costs.
Which bank you use is more important than you might think. Find out where to keep your money (and more!) In The Penny Hoarder Daily.
Some other considerations:
Online banks typically have fewer (or no) fees for overdrafts, overseas transactions, and ATMs.
Online banks usually have superior mobile apps, but traditional banks are catching up.
Brick-and-mortar banks make it easy to deposit cash.
2. Are you a frequent ATM user?
If you often withdraw cash from an ATM – or if you think you will as soon as you open your first checking account – choose a bank with locations across the country. Access to ATMs and various branches is especially important if you are being paid with tips and need to deposit cash frequently.
Alternatively, you can find a bank that is part of an ATM network. Even though your bank’s logo might not be on a particular ATM, you can still use it to deposit and withdraw money – possibly free of charge.
3. Can you meet the minimum balance requirements?
Checking accounts often have minimum balances. If you don’t plan on keeping a lot of money in your checking account on a regular basis, find an account without this fee.
If you intend to keep more money in your checking account, possibly for easy emergency access (especially those who don’t have or don’t want a credit card), look for a high-yield checking account.
4. How often do you travel?
Domestic travel is more convenient if you choose a bank with a large national ATM network.
However, if you travel overseas regularly and don’t have a toll-free credit card, find a checking account that offers a debit card with no foreign transaction fees. This allows you to redeem your card in foreign restaurants, shops and airlines or withdraw money from an ATM without incurring any fees.
5. Do you agree to have your checks and savings with different banks?
Do you already have a savings account with a bank? In this case, transferring funds from checks to savings and vice versa is much easier when the accounts are linked at the same bank.
However, you have the potential for better prices if you keep them separate. Bank A may offer higher APY and lower fees for their checking account, while Bank B may have superior APYs and a larger ATM network for their savings account. By diversifying your checking and savings accounts, you can optimize your earnings and reduce the cost of unnecessary fees.
FROM THE BANKING FORUM
Synchrony bank8 / 19/20 @ 4:19 PM
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Chime Bank / Bancorp7 / 23/20 @ 1:32 pm
ATM Cash Withdrawal5 / 18/20 @ 2:14 PM
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6. Is there a sign up bonus?
Banks often have promotional offers – usually a cash bonus when you open an account and keep X amount of money in it for a period of time. If you’re considering a handful of similar accounts with no major differences, choose the account that offers the best sign-up reward right now. For a full list of these bonuses, see our coverage of bank promotions.
7. Should you choose a credit union instead?
Banks are not the only institutions that offer checking accounts. If you qualify for joining a credit union, you may find a better account there for your needs. Use our guide to choosing between a credit union and a bank.
Ready to look for an account? Here are some of our best checking accounts.
Timothy Moore leads a team of editors and graphic designers for a market research firm as his full-time appearance. As a freelance writer, he writes on personal finance, careers, education, animal care, travel, and the automotive industry. His work has been published on Debt.com, The Ladders, Glassdoor, and The News Wheel.