by Kailey Hagen | Updated July 17, 2021 - First published on Sept. 13, 2019
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Make sure your checking account checks every box on this list.
Most people don't feel safe keeping their extra cash in their sock drawer, so they turn to a bank. A checking account is a great place to stash the cash you need to pay bills, groceries, and other routine expenses, but they aren't all created equal.
A lot of the time, people don't give these accounts a lot of thought, but a good checking account could make managing your money a lot easier. Here are four reasons to give your checking account a once-over and consider switching to a new one.
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Some checking accounts have minimum balance requirements, monthly maintenance fees, and overdraft fees. These all used to be pretty standard, but with the rise of more affordable online banks, many brick-and-mortar banks had to drop some of these fees in order to remain competitive.
Today, it isn't difficult to find a checking account that doesn't charge you in order to access your own money. Don't stick with a checking account that requires a minimum balance or charges a monthly fee unless you're really attached to that bank for a different reason -- like it offered you a great deal on a loan and you want to keep all of your accounts together.
Unless you rarely venture outside of your hometown, you'll probably want to make sure that the bank you choose has a large network of ATMs in case you need some quick cash and you're not near a branch location. Many large brick-and-mortar and online banks have a nationwide network of no-fee ATMs and a tool on their websites and mobile apps so you can quickly locate the nearest in-network ATM.
Some banks take things one step further and offer ATM fee reimbursements up to a certain dollar amount each year. This is worth looking into if you travel often and can't always find a fee-free ATM near you. Make note of the monthly or annual limits on how much your bank will reimburse you in ATM fees. It may not cover the full cost, but it could help you save a few dollars each month.
Interest-bearing checking accounts help your money to grow while it sits in your account. But those hoping to fatten their wallets by stashing cash in a checking account will be disappointed. The average interest-bearing checking account is around 0.04% annual percentage yield (APY). To put that in perspective, if you had a $1,000 balance in your checking account, it would only be worth $1,000.40 after one year with a 0.04% APY.
High-interest checking accounts do exist but they're rare. Still, they can offer more than 1% APY and might be worth considering if you want to grow your money more quickly. But be aware that there are often restrictions on the number of transactions or withdrawals you can make per month, which could interfere with your ability to manage your money the way you want to. Plus, if you're taking money out of your checking account frequently, you're not giving what's in there much time to accrue interest.
Another option is to seek out a high-yield savings account and stash most of your money in there. These accounts usually offer better interest rates than high-yield checking accounts. Once you've found one you like, make sure to read the fine print so you understand any fees or bonuses available with it. And review the bank's checking accounts to see if they might work for you.
The user experience is often overlooked when choosing a checking account, but it's arguably the most important part because it determines how easy it is to manage your money and how happy you'll be with your bank overall. Read the fine print to understand any rules and fees surrounding your checking account and note the online resources the bank offers.
You should be able to update personal information, view your transaction history, and pay bills through an online account as well as through a mobile app. Some banks even have mobile apps that enable you to deposit checks by taking pictures of them so you don't have to visit a nearby branch.
Think about how you typically manage your money and the types of tools and resources that are important to you. That way you can make sure the checking account you choose checks all these boxes.
All checking accounts do more or less the same thing, but the more you delve into the details, the easier it is to see the subtle differences that set some of them apart. By focusing on the above details, you can find the right checking account for you -- one that lets you manage your money in the way you want without charging you excessive fees to do so.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. The Ascent's picks of the best online savings accounts can earn you more than 8x the national average savings account rate.
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