WHY SHOULD I GET A CHECKING ACCOUNT?
A good checking account is one of the most important tools you can use to help you manage your money. By providing a record of all of your day-to-day transactions and recurring bills, checking accounts offer insight into how you are spending and saving your money. Checking accounts also allow you to conveniently send or receive money directly to or from your account.SHOULD I GET A CHECKING ACCOUNT OR SAVINGS ACCOUNT?
In principle, checking and savings accounts are somewhat similar: both provide you with a way to store and easily access your money. However, checking accounts are typically used for immediate-term expenditures vs. long-term ones. Savings accounts often require a minimum balance to avoid fees, have limits on the number of transactions you can make per month, and can pay higher interest rates than interest-bearing checking accounts. In addition, checking accounts sometimes charge a monthly maintenance fee, whereas that is uncommon for savings accounts (providing you maintain the minimum balance.)The short answer to the question of checking vs. savings is that a financially responsible person should really have both. Your checking account should be used to pay for daily transactions or recurring bills, as well as keeping track of your spending habits; whereas a savings account should hold the money reserved for emergencies and big future purchases or investments.
DO CHECKING ACCOUNTS CHARGE FEES?
Most checking accounts are free to set up but carry certain fees with them. These can be monthly maintenance fees, overdraft fees, fees for withdrawing money from an ATM, or foreign transaction fees. The good news is that many checking account providers will waive some of these fees if you meet certain conditions. For example, oftentimes banks will waive the monthly maintenance fee as long as you maintain a certain balance in your account or if you have a paycheck that is deposited directly into your account. Other banks may have deals where they reimburse the fee incurred by using a competing bank’s ATM.It is important to carefully examine the different fees checking account providers charge in the context of your own spending habits.
WHAT SHOULD I BE LOOKING FOR WHEN CHOOSING A CHECKING ACCOUNT?
In addition to considering the fees, when you are picking a place to store your money there are some factors you will want to consider. The safety of your money is probably tops on your list. Congress created the Federal Deposit Insurance Corporation (FDIC) in 1933 following the failure of thousands of US banks. The goal of the FDIC is to inspire confidence by serving as an independent regulatory agency of the banking industry. The FDIC insures depositors (you as an account holder) for at least $250,000 per insured bank. This means if the bank were to fail or close, you wouldn’t lose your money. Before putting your money into a checking account, you will likely want to check that the financial institution is FDIC-insured.Another factor to consider in choosing a checking account is convenience. Since checking accounts are generally used to store money you will use in the near term, you’ll want to be able to access that money. How you access your money will depend on your individual spending habits. This can mean you have a physical bank branch close to your home or workplace or that there are many ATMs that allow for free cash withdrawal. Also, while many banks offer a form of online or mobile banking, some still don’t. If you want to be able to keep track of your checking account on the go, you will likely want to consider a bank with those options.
ARE THERE DIFFERENT CHECKING ACCOUNT OPTIONS FOR STUDENTS?
Many banks will offer checking accounts specifically for students. These accounts typically offer no minimum balance requirement, no monthly maintenance and other perks such as free withdrawals at select competitor ATMs or free checks. These accounts can be a great option for college-bound students just getting started with managing their money.WHAT ARE SOME SIGNS I MAY NEED A NEW CHECKING ACCOUNT?
Sometimes your bank may be fine but just not a good fit for you. Also, the bank you used when you were a teenager may no longer meet your current needs. When assessing whether or not you need to switch to a new checking account, one of the biggest issues is often those fees. If you are seeing new fees pop up on your account, you should find out what they are for and if you really need to be paying them. If your checking account now has a minimum balance fee or you are being charged a fee because you no longer have a direct deposit into that account, you may need to switch it up.When choosing a checking account, it is important to compare different providers to find one that best suits your needs.
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