Opening a Checking Account? What to Look For
Whether it's your first time opening a checking account or you are opening up a new one, it's something that you should give some thought to. Many assume that checking accounts are the same across the board and are simply for dealing with day-to-day financial transactions. However, it's important to note that there can be significant differences between checking accounts. Finding one that suits your needs can take some research. Here are three things to look for when opening up a new checking account.
The first thing that you should be aware of when opening an account is what types of fees you may be dealing with. Maintenance fees are high on the list of things that you should look for first. For many banks, the average monthly maintenance fee is between $10 and $12 for a basic checking account. This fee may be waived if you have direct deposit or have a certain minimum balance. Some banks even offer free checking accounts. However, it's important to read the fine print in order to determine if it's actually free or if you have to meet certain requirements.
Another thing to consider when opening up a checking account is the overdraft fees. While avoiding overdrafts is something you will want to do, overdrafts cannot always be avoided in times of low account balances. Knowing how much your overdraft fees are is key. Some banks charge more aggressive fees than others. The average overdraft fee is $34. If your balance is in the negative for multiple days, you may find that an extended overdraft fee is charged. It's important to know what these fees are in case you find yourself in this situation.
Some Accounts Earn Interest
While it's important to take a close look at any fees that are charged just for having a checking account, you should note that if you plan on having a higher balance in your checking account, you may be able to earn interest. The average annual percentage yield, or APY, for checking accounts is right at 0.06 percent. Even if you have a free checking account, you probably aren't seeing much interest accrued. However, some checking accounts have up to a 5 percent APY for those with higher balances. If you want to earn interest on your checking account, shopping around may be your best bet.
If you are opening a checking account, there are a few things that you should look for. First, maintenance fees are charged by various banks. Free checking may be a great alternative, but you may need a certain minimum balance or direct deposit. Overdraft fees are also important. Some banks charge higher fees than others. It's also possible to find checking accounts that earn interest. Up to 5 percent APY is possible if you shop around.