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FDIC Consumer News

Spring 2014

Checking Accounts: More Questions to Ask

Audio (MP3 4 MB)

Various reports suggest that it’s getting harder to find free or low-cost checking accounts. To help you get the best deal on an account that meets your needs, consider these questions.

What do I need most from a checking account? "Make a list of the services you need so you can select a checking account that's a good fit," said Luke W. Reynolds, Chief of the FDIC's Outreach and Program Development Section.

Which banks should I consider for a checking account? First, make sure your current bank or prospective banks are FDIC-insured, so your deposits are protected if the institution fails. Next, consider whether you prefer to bank in person, which means you might want a bank with branches close by, or if a distant bank with online services and a convenient network of free ATMs will meet your needs.

"Far-away banks may advertise high interest rates or low fees, but don't overlook banks in your community, including smaller banks," said Bobbie Gray, an FDIC Supervisory Community Affairs Specialist. "Just because a local bank doesn't advertise online doesn't mean it may not be offering free or low-cost checking."

How can I compare the costs of different banks' checking accounts? Review each bank's disclosures of fees and services, and then focus on the costs you expect to incur. Also compare the products and features a bank offers on its Web site to what it offers when you call or visit a branch; it's possible that a special offer may be available through certain branches only and not online, or vice versa.

What can I do to get a better deal? Having your paycheck or other income directly deposited into the account may help you qualify for a more attractive account. Some banks also offer a significantly higher interest rate up to a certain balance, often provided you also meet other conditions, such as using a debit card a set number of times or receiving your statements electronically.

In addition, banks may offer cash or another one-time bonus for opening a new account. "Still, you need to decide which account is right for you for the years ahead based on how you plan to use it," Reynolds advised. "Be realistic about whether a special offer is going to consistently change the way you normally handle your finances.”

Similarly, banks want to develop lending relationships with their deposit customers and some may offer a break on checking account fees if you get a new credit card or refinance a loan with them. "But if you already have several credit cards and you want to get one more just to save on checking fees," Gray said, "ask yourself if you can still closely monitor all your accounts to quickly catch a billing error or a change in account terms that could cost you money."

Am I interested in using new, high-tech ways to save money on my checking account? Text messages or e-mail alerts about your account reaching a low balance that you set (say $100) can help you curtail spending or add funds to avoid overdraft fees. Or, you may be able to save on gas and stamps by using a smartphone or ATM to deposit checks or pay bills.

How will the bank handle transactions that would put my account balance in the negative? Under federal rules, you must have previously “opted in” (agreed) to an overdraft program before a bank can charge you a fee for approving an "everyday" (one-time) debit card transaction that would exceed your account balance.

"Ask your bank how it treats transactions that you do not have enough money in your account to cover," Reynolds said. "If you have already opted in, you can change your election if you want to avoid the risk of costly fees for these transactions. You may also consider linking your checking account to a savings account to automatically cover an overdraft for a smaller fee."

Also remember that the easiest way to avoid overdraft fees is to keep an up-to-date record of how much money is in your checking account, including recurring automatic payments, and know your balance before using your debit card or writing a check.

Would it be better to receive statements electronically or in the mail? Either way, to limit your potential losses in the event of a problem, such as a fraudulent transaction, promptly review your statements and report errors.

What should I do before moving my checking account? Consider keeping your old account open until you are sure that any electronic deposits or withdrawals have been processed and all the checks you wrote have cleared.

For more ideas for saving money on a checking account, go to