May 27, 2022 / Money Tips

How to Choose the Right Checking Account

A checking account is a checking account is a checking account. You put your money in, you take your money out, you get a little interest, and that’s what it’s all about. You can find the same hokey-pokey routine at every bank or credit union in Utah, right? Not so fast! While there are many similarities between checking accounts, there are a few small distinctions that can make a big difference on your finances and quality of life.

Punitive Overdraft Protection

Overdraft protection, sometimes called courtesy pay, is a fantastic consumer-friendly service. You accidentally overdraft your checking account, your financial intuition covers the difference for a small fee. But when your bank or credit union tries to take advantage of your oversight for their financial gain, overdraft becomes more punitive than protective.

In fact, the average overdraft fee is an outrageous $35. That means every time you overdraw your account, your bank makes a quick 35 bucks. It’s your bank’s way of adding expense to embarrassment, especially considering most overdrafts are the result of simple oversight. It’s hard to believe, but banks and credit unions collected more than $15 billion through overdraft in 2019 alone.

Before opening the first checking account that comes your way, look for a bank or credit union that offers a more forgiving overdraft protection fee—say one that’s $14.95, the lowest in Utah. That way, you enjoy the convenience of the occasional oversight without contributing excessively to the billion-dollar overdraft industry.

Balance Requirements

Did you know that many banks and credit unions will charge you money if your account dips below a certain balance? It seems counterintuitive—the less money you have, the more you get charged—but it’s the unfortunate reality of a lot of checking accounts.

These fees work in different ways. Some ding you for dipping below a certain threshold. Others have a daily balance requirement that’s assessed at the end of each day. Some are even disguised as “maintenance fees.”

Before opening a checking account, ask about the minimum balance requirements and how they work. Even better, look for a credit union that offers a no-minimum balance account, so you don’t have to worry about the threat of fees hanging in the balance.

Hidden Fees

Your account might be called free checking, but if you read the fine print, you might be surprised at all the hidden fees lie in wait. Some of the more common fees include ATM fees, mobile deposit fees, and external transfer fees.

Some accounts are only “free” if you meet certain requirements, like setting up direct deposit, receiving digital statements, or staying above the aforementioned minimum balance requirements.

Either way, you can avoid these unpleasant surprises altogether by finding a checking account with no hidden fees. Before you open an account, make sure you ask about and understand every possible fee that could be assessed and the events that trigger them.

An Account that Fits You

Not all checking accounts are exactly alike. They might all seem the same in purpose, but they include intricacies that can affect your finances. If you’re interested in opening up a checking account that’s personalized to your unique financial situation—perhaps one with no minimum balance requirements, no hidden fees, and the best overdraft protection in Utah—come chat with one of our helpful financial experts.