With the addition of online banks to brick-and-mortar institutions, there are a lot of options when it comes to opening checking and savings accounts. There are common factors you should look for in an account, no matter where you choose to bank.
What to Look For in a Checking Account
In a checking account, you should look for an account with no monthly fee, or one that is at least easily avoidable, says chief financial analyst at Bankrate.com Greg McBride in a June 2014 article in Forbes.
For instance, some financial institutions will waive a fee if you sign up for direct deposit with your employer or if you maintain a minimum balance that they set. Still, an even better checking account is one that requires no minimum balance at all, says McBride.
A June 2014 article in Forbes by contributor Laura Shin discusses several other important things to look for in a checking account with regard to ATM use and overdraft protection.
Shin suggests you consider whether the institution you’re holding a checking account with has a large network of ATMs outside the financial institution that you can use surcharge-free or that will reimburse the fees imposed by third-party ATMs. Additionally, you’ll want to look for an account that does not incur fees for withdrawing money from the institution itself.
Almost all financial institutions charge an overdraft fee for a checking account that has a negative balance. With overdraft protection, look for a checking account that has a low fee and an institution that won’t manipulate your transactions to generate fees, such as processing withdrawals or payments before deposits.
What to Look For in a Savings Account
Shin goes on to suggest that for both a checking account and a savings account, you should look for an institution that doesn’t set a limit for transfers, withdrawals or any other transaction past the federal limit. You should be free to manage your money as needed without incurring charges for it, and the money should be easily accessible by teller, ATM withdrawal and even online transfer.
According to a March 2014 article in Bankrate.com by contributor Constance Gustke, although federal regulations enforce savings withdrawal limits to six per month, some institutions will further limit your total monthly withdrawals or impose a major fee for any withdrawals past the limit. It’s therefore also important to check with the institution on its policy regarding savings transactions and fees.
Gustke also notes that consumers should make sure their institution offers online banking as well as the ability to conduct a mobile deposit and not just manage the money through the online portal. You should also make sure any online transactions can be conducted without an additional fee, Shin adds.
In addition, it is critical to make sure your account is federally insured, meaning you would get back 100 percent of your deposits should the account fail or close, for up to $250,000 per account, as per federal regulations, Shin reports.
You should also look for a savings account with a competitive interest rate and one that can subdivide your deposits into separate goals such as emergency savings, home-buying down payment and even vacation savings.
It’s All About the Freedom
“One of the things you [should look] for is a [financial institution] that will allow you to conduct your affairs but not be charged fees, or be nickeled and dimed for fees or have high fees associated with it,” says Pamela Banks, senior policy counsel covering financial services issues for Consumers Union, in a June 2014 article in Forbes.
