Things to Know About Checking Accounts

Though it’s no longer as necessary as it once was, most adult Americans have at least one checking account. Once, it was virtually the only cash-less way to move money. Now, with debit and credit cards, online payment systems and email money transfers, options are many and varied. Still, there remain situations where checks are the way to go. Let’s examine the state-of-the-art for this banking product staple.

Don’t Pay for a Checking Account

The day is passed for multi-service checking accounts that you’d pay for the added services. Most banks now offer options to eliminate maintenance fees. If your bank does not then it’s time for a new bank. There’s usually a requirement to maintain a minimum balance or set up direct deposit of your employment income. These requirements vary widely between banks, so don’t accept the first offer until you see what else is available in your area.

Internet-only banks are upsetting the norms of traditional banks and it’s possible to find checking accounts free of fees, maintenance charges, minimum balances and direct deposit requirements. Expect this to generate changes in traditional banks. You can often bypass the need to write checks at all by paying bills directly online, a service which many of the mainstream banks also offer. In return, you may need to accept some risk about data security and the potentially troubling aspects that may accompany a data breach or theft of your identity.

You Can Earn Interest

While it’s not stunning, interest-bearing checking accounts are out there. Here too, you’re likely to need minimum balance or direct-deposit requirements. It’s also likely these will be more demanding the higher the interest on offer. Expect to earn interest around 1.25%. Nothing to get excited about, but if you can maintain the minimum balance requirements, it’s free money.

You may be able to come close to doubling your interest if you can locate a money market account with checking privileges. Once again, qualifying requirements may be higher than regular no-fee accounts, but interest may climb into the two percent range. It may be worth the effort. While it’s a trickle of investment income, these are dollars earned without effort on your part, once you find and set up the account.

Rewards Checking Accounts

While harder to find still, rewards checking accounts may be an option. A product that some smaller banks use to compete, rewards checking acts as a super-charged interest bearing account. Returns could double the rates paid on money market accounts, and qualifying requirements are equally stratospheric. Since this is a small bank product, the health of the bank in question may be crucial to the long-term health of your checking account and the rewards available to you.

Targeted Checking Accounts

You may belong to a group with special banking products on offer, including no-fee checking. Common groups include individuals like students and seniors, or commercial customers such as small businesses. Groups with their own credit unions expand the potential for low-cost banking even further. It’s possible for many people to access one credit union or another, and these can sometimes offer other advantages over conventional banks.

Lifeline checking accounts may be required by law in your state. If so, low-income bank clients have an assured, low to no-fee checking account option. Services may be limited, such as a set number of checks per month before fees. Generally, lifeline accounts meet basic banking needs.

Second chance checking accounts offer services to people with previous checking account trouble. Sporting typically higher fees, your creditors can count on secure checks. This is a great restart for someone reported through Chex Systems.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.

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