Make the most of your Checking Account

Checking accounts are an easy way to have fast, reliable and convenient access to your money. Almost everyone has at least one checking account that they use to pay their bills and have immediate access to their funds. In general checking accounts are not the most lucrative from an investing standpoint. While a high-yield savings account may make you more money in interest it might not be very convenient for you since it would make it harder to have access to your funds. You can make your checking account lucrative for you in some very simple ways.

Fees: All banking institutions charge fees of some sort and it’s important for you to know which are applicable to your checking account. One of the easiest ways to avoid fees is to do the majority of your banking online. It costs money for banks to have a teller help you in person and many of them charge fees for services inside of a branch. Sometimes there are things that you have to be inside a branch to do but or most day to day activities your online banking is sufficient and fee free. Make sure you understand the requirements for not incurring a monthly service fee. For most banks this is some combination of having a minimum direct deposit amount or making a minimum number of debit card purchases every month. Generally, these requirements are not difficult but it can be easy to miss them if you don’t know what they are. Determine if you want overdraft protection on your account. One answer is not right for everyone on this front. The options you have are that if you enable overdraft protection the bank can pay a transaction for you even if you don’t have enough available funds and then charge you a fee that usually ranges from somewhere between $20 and $30. If you choose not to have overdraft protection then the bank will reject any transactions that you don’t have available funds for but will also charge you a non-sufficient funds fee that is generally the same amount as an overdraft fee, and you also might face fees and penalties from the merchant that was rejected. The choice is up to you when it comes to overdraft protection but it’s important that you understand how it all works before you make a decision.

Shop Around: Checking accounts that earn interest are not very common these days but they do exist. The bank you are currently with might offer you the best rate or it might not, you have to shop around. A lot of the checking accounts with the highest interest rates are online only bank accounts. If you find that you do most of your banking online and through debit card already then this might be the right option for you. Look at the requirements of those accounts to determine if it’s something you can easily meet. Another option rather than an interest checking account is a rewards checking account. However, it is important to note that rewards checking accounts often have more requirements for their use than interest accounts.

Protect Your Funds: Many consumers have the mistaken notion that banks are actively monitoring and tracking their money for their security. In this digital age that is not possible. Think of the bank as a storage unit for your money. Most of the time it’s safe there but if you don’t go inside and check on it now and then it would be impossible for you to know if a break in happened. And it does happen. Check your monthly statements carefully and notify your bank immediately if you see anything odd. There are rules about how long you have to report fraudulent transactions or else you may not get your money back. The only person responsible for your money is you, so keep an eye on it so that it can keep working for you.

Minimum Balance: There is no right or wrong answer to the question of how much money you should keep in your checking account. If you can find one that has a high enough interest rate then it might be in your best interest to keep as much money as possible there. But if your savings account still has the best rate, then perhaps only keep the money that you actively need access to available instead. The choice will depend on what your personal finances look like and what feels right to you.