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5 Important Questions To Ask Before Opening Your First Checking Account

8 July 2020

Eva Kennedy

A checking account is a deposit account that allows you to make withdrawals and deposits. Checking accounts differ from savings accounts in that the former permits unlimited withdrawals. With a savings account, withdrawals and deposits may be limited. You can access a checking account via ATM, checks, electronic debits, and other available methods. However, before you open one, it's crucial to know whether it meets your needs. With this in mind, here are five essential questions you should ask before opening a checking account with a financial institution.

Are There Any Fees Associated With the Account?

If you've just gotten your first job or are trying to save money, the last thing you want is to open a checking account that charges fees. According to a recent survey, banks in the U.S charge a monthly fee of between $0 and $15. The costs for ATM withdrawals also vary from one financial institution to another. If you're looking to reduce expenses, find a bank that offers a free checking account. If this isn't possible, compare the charges for different banks before opening an account.

As you check the fees, look into the minimum balance as well. Some banks require you to have a minimum balance of up to $10,000, and failure to maintain this minimum can cause you to incur a penalty. As a beginner, it's advisable to choose a financial institution that allows minimum balances of $1,000 or below on checking accounts.

What Benefits Does the Bank Offer?

Opening a checking account is not just about making deposits and withdrawals. Some banks offer incentives that could go a long way in improving convenience. For example, some allow you to open an interest-bearing account. This is an excellent option if you plan to deposit a lot of money. You can make interest on the deposits and grow your money. Other incentives include the following:

• Online banking at the comfort of your home
• No maintenance fee for users who meet the minimum balance
• Unlimited check writing if you write a lot of checks
• Online check services

These great resources can improve your banking experience and allow you to save money in the long run.

Are There Provisions for Overdraft Protection?

Are you worried about the consequences of overdrawing your account? What about instances when a check bounces due to insufficient funds? You need to protect yourself from the penalties and fees associated with overdrafts. Find a bank that offers overdraft protection. 

In this case, when an ATM, check, or electronic transaction is above the account balance, overdraft protection prevents the bank from triggering an overdraft or insufficient funds fee. Considering banks charge around $35 for every overdraft, you could end up saving a lot of money with this service. 

How Safe Will Your Money Be?

Uncertainties in the banking industry have caused a lot of players in the industry to go under. According to the Federal Deposit Insurance Corporation (FDIC), there have been 559 bank failures between 2001 and 2020. If an uninsured bank goes under, customers risk losing their deposits. To avoid this, you need to make sure your money is safe by only banking with an FDIC-insured bank. Before opening a checking account, visit the FDIC site and check whether the institution has insurance. This way, you won't lose your deposit if the bank fails due to tough economic times.

Where Can You Access Banking Services?

If you travel a lot, move between towns, or simply like to have banking options, you need to look at the accessibility of the banking services. Does the bank have branches in areas you frequent? Where are their ATMs located? Do they allow international transactions on debit cards (if you travel overseas)? Working with a bank that offers services in various locations can be incredibly convenient and time-saving.

As you shop around for the best financial institution for your first checking account, have these crucial issues in mind. Don't hesitate to visit different banks and compare their services before settling for the best one.

For more information about checking accounts, contact a local bank today.

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