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Banking Your Money

Choosing the best checking account

The best checking account for you will depend on your needs and your priorities. A few options:

• Basic checking: This account works best if you can keep only a small amount of money in your account on a regular basis. Some banks charge a small monthly fee for a basic checking account; others don't. To have a free account, you may need to have a paycheck directly deposited into your account or keep a certain minimum balance of, say, $500. If you go below the set amount, even for one day, you'll be charged a fee.
• Interest bearing: This type of account pays you interest on the money you keep in the account. Usually you'll need a higher minimum balance in such an account-typically around $1,000.
• Express: This account is best if you want to do your banking via ATM, telephone, or online. The fees are usually very low-perhaps $5 or $10 per month-and you can keep a low minimum balance. Just be sure that the ATMs are convenient for you because you will likely have to pay a fee if the ATM is not operated by your bank.
• No frills: Just like the name implies, this account allows a very low minimum balance and charges no fees or low monthly fees. The drawback is that you may be able to write only a limited number of checks per month.
• Student account: Some banks offer special checking deals to students. The perks might be low monthly fees, free checks, no minimum balance, and so on. The benefits vary from bank to bank.

Choosing the best savings account

Savings accounts generally have fewer options than checking accounts. Because the idea is to save the money in your savings account, it’s not as important that you have 24/7 access, online withdrawal options, unlimited check writing, and other conveniences that can add to the cost of the account. Instead, you'll want to look primarily at the interest you can earn, how long the account may require you to keep the money in the account, and what are the minimum balances.

Typical savings account options include:

• Basic savings account: These accounts are easy to open and you have quick access to your money. They usually pay a small amount of interest, and your money is insured up to $250,000 by the federal government.
• Money market account: The minimum balance to open a money market account is usually more—anywhere from $1,000 to $10,000. You'll earn more interest than with a basic savings account, but you may only be able to write a few checks a month. The account may or may not be insured, so check before opening an account.
• Certificate of deposit: When you open a certificate of deposit (known as a CD) you agree to have your money tied up and unavailable for a set period of time in exchange for a favorable interest rate. At the end of the term of the CD, which can range from six months to a few years, you'll receive your initial deposit plus the interest your account accrued. CDs you buy from FDIC-insured banks are insured up to $250,000.

Reviewing fees and costs

Banking fees, for everything from using a teller to protecting your account in case you bounce a check, can really add up. Before you open an account, find out what types of fees you might be charged and how much the fees are, and then estimate how many times you might have to pay these fees. A few typical fees and what they cover include:

• Account fee: This is a monthly fee you may pay for simply having an account with the bank.
• Online banking fee: If you choose to do your banking online, you may be charged a monthly fee for the convenience; the fee varies from bank to bank.
• Minimum balance fee: If your account balance falls below a certain level, even if only for a day, you may be charged a fee.
• Bounced check fee: If you write a check for more money than you have in your account, the check will "bounce" and the bank will charge you a fee. Whoever you wrote the check to may charge you a fee as well. The same applies for online bill payments.
• Overdraft protection: When you don't have enough money in your account to cover a check you write, an online bill payment, or debit card use, overdraft protection will allow the check to clear (saving you embarrassment and a bounced check fee from the store where you wrote the check).
• Teller fee: If you choose to make a deposit or withdrawal with the teller, some banks charge a teller fee.
• Account reconciliation fee. It's wise to balance your checkbook every month. If your account doesn't balance correctly, the bank can help you find where the error is, and you may pay a fee for the assistance.
• ATM card fee: Many banks provide an ATM or debit card for free, but some banks charge a fee for providing the card.
• ATM transaction fee for ATMs not owned by bank: You may pay a fee to use any ATM machines that are not owned and operated by your bank. The fee may only be a dollar or two, but if you make many ATM transactions during the month, the fees add up.