checking account FAQs

Posted : February 7, 2018
Last Updated : February 7, 2018

checking account FAQs

These are questions you may have during your search for a checking account. You can refer to this list for information or ask a bank professional for information specific to that bank.

What are the fees?

The Truth in Savings Act requires institutions to disclose fees before you open a deposit account. If there is a monthly fee, ask about ways to reduce or eliminate it (e.g., having your paycheck directly deposited to your account or by maintaining a minimum balance). Also ask about other fees (e.g., for using ATMs or overdrawing your account). As you shop around, consider only the fees you expect to incur and don’t worry about the rest.

Is there a minimum balance requirement? What’s the penalty for going below the minimum?

You may be able to meet the requirement or reduce the penalty if you have other accounts at the same bank or if you use direct deposit.

Will the account earn interest? If so, how much and what factors can raise or reduce the interest rate?

Some checking accounts pay interest, others don’t. A high interest rate or APR on a checking account is definitely an attention grabber. But that great rate shouldn’t divert your attention from fees that can significantly reduce, if not wipe out, your earnings. Examples include monthly fees for going below a minimum balance, and monthly or quarterly “inactivity” fees if you have had no deposits or withdrawals for a certain time period.

To get the best deal possible, first think about how you plan to use the account and how much you expect to keep on deposit, and then compare different accounts at a few different institutions. Do the math as best you can, figuring your interest earnings after a year, and then subtract the estimated fees for services or a low balance based on your expected use of the account. Sometimes an account that pays no interest can be a better deal than an interest-bearing account that’s heavy with fees you’re likely to have to pay.

Also, remember that just because an account is advertised as “free” or “no cost,” it doesn’t mean you’ll pay nothing. Under Federal Reserve Board rules, an account may be described as free even if certain fees are charged (e.g., for ATM withdrawals or overdrafts).

If I overdraw my account, what are my options for avoiding fees for insufficient funds?

Many banks offer overdraft lines of credit, which work like a loan. Keep in mind that these programs typically come with their own costs. Of course, the best way to avoid overdrawing your account is to keep track of your spending and monitor your account balance.

Will the bank and the account be convenient for me?

If you make frequent visits to the bank or to ATM, their locations (and the fees paid for ATM withdrawals) may be the most important consideration in deciding where to open a checking account.

How can I avoid unnecessary costs?

Keep track of all account withdrawals, not only ATM transactions and debit card purchases, but checks and bank fees. Don’t rely on your ATM receipt for balance information, because it may not reflect outstanding checks or debit card transactions.

Promptly review your account transactions either online or with your bank statement to look for errors or unauthorized transactions. Open and review your monthly statement as soon as it arrives in the mail, or check your account information more frequently online or by phone.

Take additional precautions to avoid fees for insufficient funds. For instance, make sure you have enough money in your account before you write a big check, use your debit card, or arrange for an automatic payment. Also, remember that under federal rules that allow banking institutions to put a temporary “hold" on certain deposits, you may have to wait from one to five business days (in most situations) before you can withdraw funds deposited into your account; possibly longer in other circumstances (e.g., deposits over $5,000 or if your account has been repeatedly overdrawn).

How can I protect myself from identity theft?

Be extra careful with your full name and address, date of birth, Social Security Number (SSN), bank account information, phone number, and your mother’s maiden name. This is personal information that banks and other businesses use to confirm your identity, which can be very valuable to an identity thief wanting to pose as you to commit fraud.

Don’t give out personal information in response to an incoming call, text or email from a stranger, or an advertisement on the Internet. For example, beware of what law enforcement officials call “phishing,” a type of identity theft in which criminals use fake websites and emails to “fish” for valuable personal information.

Take advantage of your right under federal law to obtain one free copy of your credit report (a history of paying debts and other bills) each year from each of the three nationwide credit bureaus (Equifax, Experian, and TransUnion). Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job. By periodically reviewing your report, you can make sure the information is accurate and correct any omissions or errors, especially before you apply for a home loan or seek some other benefit where your credit report could affect the outcome.


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