A checking account allows individuals easy access to their money. When you open an account of this type, you would be issued with a debit card and a box of checks. You could use this account for shopping, paying your bills, and even for making online payments.

Although a checking account offers a great deal of convenience, it comes with several costs and charges. Firstly, your bank would probably not pay you any interest on the balance that you maintain. There is also a host of fees that you may have to bear.

Big banks that have an extensive branch network and a large number of ATMs usually charge you more. The costs associated with a checking account include fees for not maintaining a minimum balance, charges for using non-network ATMs, overdraft fees, and possibly even a fee for the paper statements that you receive on a monthly basis from your bank.

If you are not careful, the amounts that your bank charges you could add up to a significant sum. Here are a few steps that you can take to keep your checking account-related expenses under control.

1. Maintain the required minimum balance

Almost every bank stipulates that your checking account should have a certain minimum balance at all times. If the money in your account goes below this limit, you would have to bear a charge.

Take the example of the Wells Fargo Everyday Checking account. Account holders have to maintain a balance of at least $1,500 on a daily basis. If you have less than this sum in your account, you would be required to pay a $10 monthly service fee.

But many banks give you the opportunity to avoid paying these charges. Wells Fargo waives this fee if you use your debit card at least 10 times in a month. Another way to gain exemption from the minimum balance requirement is to have at least $500 directly deposited into your account from your employer.

Remember that each bank has different rules. It is important to select an account that matches your requirements.

2. Consider using an online checking account

An online checking account can save you a great deal of money. The Discover Cashback Checking account does not require you to maintain a minimum balance. You also get access to over 60,000 no-fee ATMs across the country.

But an online account may not be suitable for everyone. You would not have the facility of going to your local bank branch if you faced a problem with your account. Depositing checks that you receive may also be cumbersome.

However, if an online checking account meets your needs, you should definitely opt for one. The savings that you make could be substantial.

3. Don’t opt for overdraft protection

Your bank will offer to link your checking account to your savings account or your credit card. It is also possible to connect your checking account to a line of credit.

What purpose does this serve? If you opt for this facility, which is known as “overdraft protection,” you can spend money using your checking account even when you do not have a sufficient balance. The bank simply takes the money from your savings account/credit card/line of credit.

Although this is a useful facility, it comes at a cost. Banks usually charge a fee that could be about $30 every time they transfer money to your checking account in this manner.

If you don’t opt for overdraft protection, you can avoid paying these fees.

4. Consider opening an account with a credit union instead of a bank

A credit union can be an excellent low-cost option for a checking account. These financial institutions are not banks. They are cooperatives that accept deposits from their members. To open a checking account with a credit union, you would first need to become a member.

One of the greatest advantages of dealing with these financial institutions is that you would get excellent service. This is because credit unions tend to be small organizations, unlike many banks that are large and impersonal.

If you open a checking account at a credit union, you would probably not have to maintain a minimum balance. Additionally, the fees that you would have to pay for various services would be lower than those charged by banks.

However, a credit union would have a limited number of branches and relatively fewer ATMs.

Study the terms and conditions of your checking account

The costs associated with a checking account can vary widely across banks and credit unions. Which account you select would depend to a great extent upon the manner in which you spend your money.

If the balance that you maintain tends to be low, it would make sense to opt for an account that does not impose a penalty for this. Similarly, if you regularly receive payments by check, an online account may not be suitable.

Every checking account comes with detailed terms and conditions. When you are studying these, pay special attention to the fees and penalties that are listed. After completing this exercise, you will be in a position to decide whether a particular checking account meets your needs.



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