How to Select a Checking Account

By: Chelsea Stefanelli, Deposit Compliance and Specialized Services Manager

Posted on 8/23/2019 11:00:00 AM

Not all checking accounts are created equal, and when you start looking at the options, it can get overwhelming. From interest-bearing accounts to free checking or checking accounts with fees, the options seem nearly endless. Don’t worry! We’ve put together this guide to help you weigh all the options and find the perfect checking account for your needs:

What is a Checking Account?

A checking account is an account at a bank or credit union that holds money you deposit into it, such as cash deposits made at a bank or ATM or direct deposits from your employer. It can be interest bearing or not and can include fees or not. It’s ideal for holding the money you use every day to make purchases because money in a checking account is easy to access. 

The Elements of a Checking Account

A checking account is often much more than just a place where your money is stored. There are many features that a checking account can have.These varied features that can make it tricky to figure out which checking account to choose. Here’s a breakdown of some of the most common features of checking accounts:

Account Minimums

Account minimums are the minimum amount of money you must hold in your account at specific times. Account minimum balances can come in the form of daily, monthly, combined, and even average balances. Sometimes these minimums aren’t straightforward, so always read the fine print to find out the account minimums. Not meeting these minimum usually results in fees being taken directly out of your account. The Huffington Post offers some great tips for avoiding these fees, which you can read here

Checking Account Fees

Speaking of fees, some checking accounts cost money to open and maintain. Many banks only charge this fee if you don’t hit your minimum balance requirements, while others will charge a fee just for keeping your account open. According to NerdWallet, those fees average around $15 a month, so they’re definitely worth investigating before making a decision. It’s all in the fine print, so we’ll repeat: read your account disclosures before signing on the dotted line. 

Debit Rewards

Checking accounts include a debit card to make purchasing easy, but sometimes debit cards come with rewards like cash back. These rewards are incentives to use the checking account, but don’t be fooled by too good to be true rewards, which often come paired with high fees. 

Overdraft Protection

Getting your debit card declined at the register can be embarrassing. That’s where overdraft protection comes in. When you make a purchase for more than you have in your account, some accounts will cover the cost or transfer money from another account. These transactions can come with fees, usually around $34 according to the Consumer Financial Protection Bureau (CFPB). Also, according to CFPB, most transactions that incur an overdraft fee are for $24 or less. 

ATM Fees

When you use your debit card to take money out of your account at an ATM, you could get charged a fee. Usually these fees are only applied when you use an ATM outside of your bank’s ATM network. Some accounts have a large network of free-to-use ATMs, while others don’t. Some will refund all ATM fees, while others refund only a small percentage or none at all. 

Online Banking

Online Banking makes life much easier. Instead of visiting a teller to check your balances and see your transaction history, you can access everything from a web browser or via a mobile app. Many banks now even offer mobile deposits for checks, making the time you spend at the bank even less frequent. 

Direct and Mobile Deposit

Speaking of mobile deposits, that’s another feature that not all checking accounts include. Make sure you understand exactly how money can be deposited into your checking account. Direct deposits and mobile deposits make life much easier. 

Spending Limits

Some accounts limit the amount of money you can spend in a day and the amount of cash you can take from an ATM. Sometimes these limits are applied only to transactions made from your debit card and sometimes they are applied to transactions when you use your card as a credit card. Some banks even limit the amount of money you can withdrawal from your account. 

Fraud Protection

Data breaches happen. It’s an unfortunate reality, and according to Rippleshot, credit card information is stolen in 35% of those breaches. Fraud protection is essential. It helps prevent and quickly stop identify theft and fraudulent purchases by monitoring your account for suspicious activity and immediately alerting you when something doesn’t look right. Make sure you understand all the ins and outs of your account’s fraud protection and prevention before making a decision. 

How to Choose a Checking Account

When looking at the features listed above, take into consideration how they fit into your lifestyle and financial situation. Do you live paycheck to paycheck with little room to spare? Then it’s probably not a great idea to choose a checking account with high minimum balances. Are you financially stable and are looking for financial incentives from your checking account? Then consider an account with a good reward system and worry less about account minimums. Is convenience important for you? Then make sure you choose an account with mobile banking and depositing. Big spender? Check those spending limits before making a decision.

Need even more help selecting a checking account that's right for you?

Check out our Debit Card Selection Tool