SUMMARY: Learn everything you should be considering when you open a new checking account.
Whether you are opening a checking account for a young teen or you’re starting a new business, there’s a lot to consider when weighing your checking account options. While it may not seem significant at first glance, checking accounts — and credit unions or banks — can be really different from one another. Here are some of the factors you should consider when opening a new checking account to make sure you get the one that’s right for you.
What kind of account are you eligible for?
When you’re looking for the best checking account, you not only need to consider the checking account you want, but also what kind of checking account you’re eligible for. If your credit score is poor or non-existent or if you have a criminal history, many checking accounts won’t be available to you. People under 18 can also find it difficult to open a checking account. Unless your bank or credit union offers checking accounts for younger teens, a joint checking account with an adult may be your only option. Bottom line: Know what you need and what might hinder you, then, shop around for a bank or credit union that offers a checking account that works for you and your situation.
Minimum balance and account fees
Some checking accounts require that the account always carry a minimum balance. If the account ever dips below that amount, a fee is assessed. Likewise, some checking accounts charge monthly or annual account fees. While that choice makes sense for someone who is opening a business checking account and needs more advanced features, your average person just needs a basic checking account that won’t charge them any fees (beyond overdraft fees of course). Be sure to read the fine print, so you fully understand all the extra costs that may be associated with your new checking account.
Is the checking account convenient?
When you open a checking account, consider convenience. Will you ever need to go into one of your financial institution’s branches or use an ATM? If so, make sure it’s relatively easy to get to a local branch and that there are plenty of fee-free ATM options in the places you might need them. What about online banking? While online banking is pretty much standard, not all online banking software and services are easy to access and use. Before you decide on a credit union or bank, check to make sure their online banking options are right for you.
Insurance for your money
Believe it or not, not all banking institutions or account types are insured, which means if something happens — e.g. the bank fails — your money won’t be reimbursed. To find out whether or not the bank or credit union you’re considering is insured, check to see if it’s listed with the FDIC (the Federal Deposit Insurance Corporation) or the NCUA (National Credit Union Administration).
Overdraft fees vs perks
Some banks offer money, gift cards, or amusement park tickets to woo new customers. While these promotions and perks can be nice, they need to be carefully weighed against other account offerings, as well as any potential fees. For example, while nearly all financial institutions charge overdraft fees for bounced checks or debit card withdrawals that result in a deficit, these fees can vary widely. Some banks and checking accounts also come with overdraft protection options. Some do not. So be wise. The best checking accounts for students, young families, and others intent on managing their money wisely aren’t necessarily the ones offering the “free” $50. They’re the ones that keep the money that’s already yours safely in your account without subjecting it to overbearing fees.