When reviewing checking accounts, there are several key things that you should look for.
– Creditor interest rate – i.e. how much are they going to pay you for lodging your money with them.
– Debtor interest rates – i.e. how much are they going to charge you if you exceed your agreed limit.
– Additional charges.
– Additional ‘value-added’ features. Many banks now offer additional benefits, over and above the standard features that you would expect from a checking account. Some of these may be financial in nature (e.g. preferential savings or loans rates), and some may be non-financial (e.g. discounts on meals at selected restaurants). Often the downside to accounts that offer these features is that you have to pay a monthly subscription charge in return.
So, what does Wells Fargo offer its checking account customers? Well, they offer a choice of 6 checking accounts, which I’ve detailed below:
1. Basic Checking account:
You need an opening deposit of $100 to open this account, and there is a $5 monthly service fee. However, you can avoid that charge if you maintain a minimum daily balance of $1,000 or if you set up a direct deposit to pay your salary or other income into the account.
As the name suggests, this account is a pretty basic checking account. Overdrafts and debit cards are available, subject to status, and you can get access to their online banking and mobile phone banking services. One additional benefit that the account qualifies you for is a 0.25% discount on select Wells Fargo loans.
Overall, it looks like a fairly standard checking account. I don’t like the fact that there’s a monthly service charge but it should be fairly easy to get the waiver by setting up the direct deposit. A major failing, however, of their website is that it doesn’t provide any information on interest rates or charges. Therefore, before considering this account, I would recommend that you check to see how competitive it is in terms of overdraft debtor interest rates and charges, and also to see if they pay any interest to you if you maintain a positive balance.
2. Custom Management Package account:
This seems to be a packaged account that offers you both a checking account and a savings account. There’s a minimum opening deposit of $100 and a monthly service charge of $8. However, as with the Basic Checking account, you can avoid the monthly service charge by maintaining a minimum daily balance of $1,000 or by setting up a direct deposit to pay your salary or other income into the account. Another way of having the charge waived is to set up a $25 monthly automatic transfer from your Custom Management Checking account to your Goal Savings account’.
The checking account features, available through this account, don’t seem to me to be any different to those offered by the Basic Checking account. The main difference, therefore, seems to be that if you open the Custom Management package, you automatically get their Goal Savings account. There’s a $3 monthly service charge on this savings account but if you set up that $25 monthly transfer from your checking account, then it will be waived.
I’m not really a fan of this kind of arrangement whereby a checking account and a savings account are linked together. I suppose it’s okay as long as the savings account offers a competitive interest rate. The danger is that you end up accepting an inferior rate of return on your savings account just for the added convenience of having your checking account and savings account with the same bank. Once again, I’d strongly recommend that you check the interest rates (both of the checking account and the savings account) before committing to this packaged account arrangement.
3. Complete Advantage Package:
Minimum opening deposit of $100 required, and there’s a monthly service charge of $12. However, you can avoid the monthly service charge by maintaining a minimum daily balance of $5,000 or a $75 automatic monthly transfer from a linked Wells Fargo savings account, or by having a Wells Fargo mortgage.
Creditor interest is earned on balances over $500 but it’s a miserly 0.1%, so hardly a big selling point. Other fringe benefits include free Wells Fargo Exclusive Checks’ and No-fee cashier’s checks’.
You also qualify for bonus interest rates on the Wells Fargo Money Market Savings account. However, their website doesn’t tell me how much of a bonus is offered or what the standard rate is on the Money Market savings account. Again, before opting for this account, it would be worth making sure that the rates and charges are competitive. Otherwise you may find that your savings are tied into an uncompetitive account or you may end up paying $12 a month in services charges.
4. PMA Package:
This is Wells Fargo’s most upmarket checking account. The minimum opening deposit is $100 and there’s a $25 monthly service charge, though you can avoid that charge provided that your balance at the end of each statement period is $25,000 or more.
You get creditor interest which ranges from 0.1% for balances under $5,000, to 4% for balances of over $100,000. If you maintained a balance of $25,000 (in order to avoid the monthly service charge), you would get 2%. However, my view on this is that if you have that kind of money you would be better putting the substantial bulk of it into a high interest savings account.
The account offers some additional value-added benefits, which include:
Free checks (any style except Home Desk)
No Wells Fargo access fee for ATM transactions
No-fee cashier’s checks, travelers checks, and money orders
Combined monthly statement includes all of your Wells Fargo PMA linked accounts
Most checking account customers (even very rich ones) will want to maintain a balance of less than $25,000 in their checking accounts; preferring instead to invest surplus cash into savings and investment instruments. To maintain a more normal checking account balance would therefore see you paying $25 per month in service charges, and the account benefits don’t justify this.
5. College Checking account:
This account is for college students. There’s a minimum opening deposit of $100, and a monthly service charge of $3.75. The monthly service charge is waived, though, if you switch from paper to online statements. I quite like this element you get to help the environment and get free banking!
You can also get a 0.25% discount on a Wells Fargo student loan, which may appeal to many college students.
The one feature that isn’t detailed on their website is what their overdraft terms, rates, and charges are for students. Given how important overdrafts tend to be for students I’m amazed at that omission. You should certainly check these details and compare against competitors before applying.
6. Teen Checking account:
This account is for 13 17 year olds but it needs to be opened in conjunction with an adult. A Check card is offered and the adult can set a daily limit on the amount that can be purchased or withdrawn from a cash machine using the card.
There is no monthly service charge, which is great, and you get free online statements.
There’s also some nice additional features, which include:
– Wells Fargo Goal Savings account.
– 24/7 online access to manage your account.
– Account alerts, with information being sent by text message, email, or online.
– Free money management tools like My Spending Report and My Savings Plan to help develop basic budgeting skills.
I’m quite impressed by this account. It seems to offer 13 17 year olds quite a good introduction to personal finance with some nice safeguards and help tools.
Overall, I think the range of checking accounts that Wells Fargo offer adults is fairly mundane. If I had to choose, I would probably select the Basic Checking account as offering the best value. My rationale for this is that I would opt to keep my checking and savings accounts separate so wouldn’t necessarily want to have to have my savings account with Wells Fargo when there are probably better internet-only accounts that I could put my savings into.
The Teen Checking account, though, looks good value and the Student account may be good too, depending on how competitive the overdraft offer is. This suggests that their strategy may be one of getting customers early and then counting on their ongoing loyalty. Not a bad strategy for a bank, provided that their service levels are high as it should be recognised that there are factors other than the quality of the accounts on offer that influence our choice of bank.