10 Frequently Asked Questions About Checking Accounts
A checking account is one of the most common bank accounts out there, but how can you know what to look for when opening one for the first time? Or maybe you’ve had the same checking account for more than a decade, but your financial needs have changed over the years—should you stick with that original account?
In this blog, we’ll answer the top ten questions about checking accounts so that you’re equipped to make the best choice based on your current economic circumstance as well as your goals for your financial future.
1. IS THERE A MONTHLY MAINTENANCE FEE?
This should be a top question for you since many checking accounts come with a monthly maintenance (or service) fee. This is essentially the bank charging you to keep an account with them. Over a year, a regular, monthly fee can take a bite out of your savings, so look for low-to-no monthly maintenance fee options.
2. DO I HAVE TO PUT DOWN A MINIMUM DEPOSIT?
Sometimes financial institutions require a minimum deposit to open a checking account. Therefore you may need to save up some money in advance and the amount will vary between banks. So you’ll want to find an account that has a low minimum deposit or even better—no minimum deposit at all.
3. IS THERE A MINIMUM BALANCE REQUIREMENT?
Another requirement to be on the lookout for is a minimum balance. To keep you from overdrawing, financial institutions can require that you keep a certain amount of money in the account at all times. If you dip under that amount, they can charge you a fee—every time you go under.
Sometimes, however, a bank will waive a minimum balance fee if you link your checking and savings accounts. But when there is a minimum balance requirement, make sure that it’s an amount you can manage given your lifestyle and spending habits.
4. CAN I USE ATMs FOR FREE?
It’s quite common for banks to charge a fee if you use an ATM that’s not part of their banking system. In fact, you can be doubly hit with a fee not only from the bank that owns the ATM—but also from your bank for using an out-of-network machine.
Credit unions, on the other hand, have shared ATM networks with thousands of machines nationwide that you can use without incurring a surcharge. Look on the back of your debit card for the network’s name or ask a customer service representative.
5. IS ONLINE OR MOBILE BANKING OFFERED?
In this technologically-driven world, online banking is mission-critical, so most financial institutions offer this service typically at no charge to the customer. Online banking allows you to monitor account balances, transfer funds, pay bills, and more—all from a computer or tablet.
Mobile banking is a type of online banking whereby you utilize a specific app in coordination with a mobile device, like a smartphone or tablet, to make transactions. Mobile banking offers the same features as online banking but also enables you to make check deposits remotely through your mobile device.
Keep in mind that you’re not automatically signed up for online and mobile banking when you open an account. You need to enroll in both (plus download the mobile app) to take advantage of these services.
6. WHERE ARE THE CLOSEST BRANCHES?
While many transactions can be done remotely, there are others where the bank requires an in-person meeting or you might need face-to-face assistance. Since you probably don’t want to drive too far to a branch, find out if there’s one close to your home or office.
7. DO I HAVE TO PAY FOR PAPER CHECKS?
Typically, a bank will provide an initial set of paper checks at no charge, so if you primarily intend to use online banking to pay your bills, this will likely work fine for you.
But if you’re a person who writes a lot of checks, you might want to investigate the cost of an additional set of checks. What’s more, some banks will charge a fee if you write more than a certain number of checks per month—which is something to consider if you do so frequently.
8. DOES THE ACCOUNT OFFER CASHBACK REWARDS?
Some checking accounts offer cashback rewards on eligible debit card purchases. Through these types of programs, you can earn anywhere from 1%-10% cash (based on the program and your purchases) that is then deposited back into your checking account every month.
Be sure to read the fine print and understand any requirements needed to activate the rewards or potential fees you could incur.
9. WHAT IS THE OVERDRAFT POLICY?
Most of us have made the unfortunate mistake of bouncing a check or paying a bill when there aren’t enough funds to cover the expense. This is called “overdrafting” on your account. Most financial institutions frown heavily on overdrafts and charge hefty fees when it happens.
That said, many banks offer overdraft protection which can come in various forms. For example, you might be able to link your checking account to a savings account so that if you overdraw on checking, the expense is automatically paid for through your savings account.
Or, some banks offer a short grace period during which you can pay off the debt and avoid getting hit with an overdraft fee.
10. CAN I EARN INTEREST ON A CHECKING ACCOUNT?
Yes, but for regular checking accounts, it’s typically a nominal rate. For high-yield checking accounts, you can earn more interest but these often require higher minimum deposits and/or higher minimum balances. And, if you fall under that minimum balance, you can incur a sizable fee.
Additionally, you might need to receive direct deposits into the account or make a certain number of debit card transactions per month in order to reap the interest benefits of a high-yield checking account.
THE UPSHOT OF CHECKING ACCOUNTS
Since checking accounts are the vehicle through which most people run their daily finances, it’s important that you find the right one for you.
At NextMark Credit Union, we offer an array of checking accounts designed to suit the diverse financial circumstances, lifestyles, and goals of our members. Just click the button below to let us help you determine the best fit.