How to Choose a Checking Account

Posted May 17 2014
by PenFed Team
woman with tablet doing internet banking

Having a checking account is really a requirement for living in the modern world, offering a convenient place to put your money as well as an easy way to shop and pay bills. But whether you’re opening your first checking account or just reconsidering your financial situation, the number of options you have for checking accounts are dizzying.

The difficulty of choosing an account may lead you to look for easy options, like opening a checking account at the bank nearest your home — but that’s rarely going to offer you the best deal. Let’s take a moment to consider just what you should be looking for in a checking account to help you find the right account for your needs.

Consider your banking needs

Not everyone wants the same thing from a checking account, so before you start weighing accounts against one another, you need to consider what you want out of this account. There’s no right or wrong answer, but your answer will determine your priorities. Here are a few examples:

  • Do you want to manage your bills online? Then you’ll want to look for an account that offers easy online bill pay options and digital billing options with the organizations you need to pay.
  • Are you looking to maximize your savings? Then you’ll want to find an account with the lowest fees and the highest interest rates.
  • Do you frequently make ATM withdrawals? Then you’ll want your financial institution to have convenient ATM locations and low — or no — fees.
  • Do you need to write a lot of checks or make a lot of transactions in a month? Some checking accounts — particularly interest-bearing money market accounts — can limit the number of checks you can write.
  • Do you prefer to bank with a teller, at an ATM, or online? Some banks offer discounted accounts that only allow ATM access while other banks exist entirely online.

Once you’ve figured out what your needs are, you can start your hunt in earnest. Look for financial institutions that meet your needs — whether that means a convenient brick-and-mortar branch or great online banking options — and then take a look at the different checking accounts they offer.

Read the fine print

While all financial institutions will try to pull you in with deals and special offers, you need to pay attention to the details to be sure you’re getting a good value. While free checking accounts are fairly common, some accounts can have a monthly maintenance fee. And many accounts — especially those that offer interest — will require you to maintain a minimum balance.

Beyond these basic fees, you can potentially run into fees for overdraft protection services, overdraft charges if you accidentally overdraw your account, ATM fees, fees for writing too many checks (some accounts limit this), fees for having or using a debit card, and more. To be sure you’re not getting a pricier-than-expected account, be sure to dig into the fine print and find out exactly what your account will cost you.

Save money on checking

If you’re looking to spend less on financial fees — and who isn’t? — there are a few options to consider even if low-end free checking accounts don’t meet your needs. One of the easiest ways to opt out of fees is to maintain a minimum balance or, sometimes, open multiple accounts with your financial institution of choice — the more money you’re handing over, the more likely they are to offer you a deal.

If keeping a high balance just isn’t an option, you may find that shopping around can get you a better bargain. Don’t feel tied to a particular financial institution just because you have an account there or it’s located just down the street — comparing accounts from different institutions may well lead you to the perfect checking account for your needs.

If all else fails, it never hurts to ask your financial institution what kind of deal they’re willing to offer you — depending on the institution, they may or may not be able to offer you a better deal, but you won’t know until you ask.