A checking account is a handy financial tool. It makes daily financial transactions a lot easier and keeps your funds in a convenient location. Since your checking account is something that you will use frequently, it's essential to choose one that meets your needs. Whether you are opening a checking account for the first time, switching to a new financial institution, or simply opening a new account, there are a few things to keep in mind. Here are three things to consider when opening a checking account.
Is It Free?
The first thing that you should consider is whether or not a checking account is free. A free checking account is one that has no monthly fees associated with it. Overdraft fees and other fees will still apply. However, no monthly fees can make a significant difference in your bottom line, especially over time. Many banks and credit unions offer free checking accounts. However, many require that you meet specific requirements to qualify for free checking. Your credit will likely come under scrutiny if you are looking for free checking. Many banks require a credit score of at least 600 for this type of checking account.
The Fees
If you are unable to find a free checking account, or if it's not right for your needs, you will still need to account for any fees that may be associated with your checking account. Monthly maintenance fees are the most common type of fee you will run into. Most maintenance fees for a checking account range between $4 and $20 per month. Other fees that you should consider are overdraft fees, insufficient fund fees, and ATM fees. Knowing how much you may have to pay in these situations is crucial.
Overdraft Protection
Even just a small error in your budget or an unexpected expense can lead to overdrafts. The average overdraft fee is $34. Even one overdraft can negatively impact your finances, which is why you should consider overdraft protection when opening a checking account. Overdraft protection will move funds from a savings account or credit card to cover the negative balance. Some checking accounts have lower overdraft fees or better overdraft protection than others.
If you are opening a checking account, there are a few things to keep in mind. First, free checking is available and can help you avoid monthly maintenance fees. No matter what type of checking account you choose, knowing what kinds of fees are present and how much they cost is essential. Another thing to consider is overdraft protection. Some checking accounts offer better protection from overdrafts than others.
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