10 Questions to Ask Before Opening a Checking Account

When comparing checking accounts, Adams believes one of the most important features to look for is an account with no monthly maintenance fees. Because fees can quickly eat into your balance if you’re not aware of them, look out for the following when comparing checking accounts:

• Monthly maintenance fees: Many banks charge monthly maintenance fees for their checking accounts. However, banks will often waive these fees if you meet certain requirements, such as maintaining a minimum balance or having other financial products with the same bank.
• Nonsufficient funds (NSF) fees: You may incur an NSF fee if your bank declines a transaction because you don’t have enough money in your account to cover it in full. To avoid this fee, make sure you know your account balance before making a purchase. Many banks have alert features you can set up that will text or email you if your balance is getting low.
• Overdraft fees: If you don’t have enough money in your account to cover a transaction, overdraft protection allows the bank to approve the transaction. Many banks charge a significant fee for each overdraft, but some checking accounts have no overdraft fees at all.
• ATM fees: If you use an out-of-network ATM (one that isn’t part of your bank's network), you may have to pay a couple of different fees: an operator fee from the ATM owner and an out-of-network fee from your bank. If you want to use an ATM while traveling internationally, you may also have to pay an international transaction fee.

Some checking accounts have a minimum balance requirement, which means you must keep at least a specific amount of money in your checking account at all times. In exchange for maintaining a minimum balance, the bank or financial institution might waive its monthly maintenance fee or allow you to earn interest at a particular rate.

If you drop below the minimum balance requirement, you might be charged the monthly maintenance fee or lose out on your interest payment.

To avoid the minimum balance requirement, search for an account that doesn’t have one. For example, companies like Discover , Chime and Capital One all offer checking accounts with no minimum balance requirements.

If you don’t have enough money in your account to cover a transaction, the transaction might be declined and you may incur an NSF fee. But some financial institutions allow you to opt into a service called overdraft protection, which can prevent declined transactions.

Overdraft protection works by linking your checking account to another account. For instance, you might link your checking account to your savings account, credit card or line of credit. Anytime you don’t have enough money in your checking account to complete a transaction, money is pulled out of your designated linked account to cover the difference.

While some banks charge a fee for this service, it still might be worth it, given that NSF fees can quickly add up and start depleting your account balance. However, some financial institutions have eliminated NSF fees altogether.

Generally, when you use an ATM that is part of your bank’s network, you don’t have to pay a fee to withdraw your cash. However, if you use an ATM outside of your bank’s network, you may have to pay a fee (or fees). This is why you want a bank with a large network of ATMs with locations close to you.

If you really want to avoid ATM fees, it’s possible to find a financial institution that won’t charge any ATM fees or that will partially or fully reimburse you for any out-of-network ATM fees. This is more common among online banks (like Ally ) versus traditional banks.

Online banking can make many tasks like transferring money or paying bills more convenient. Rather than trying to make it into a bank branch during business hours and then waiting in a long line to speak with a teller, you can perform your banking tasks at any time from anywhere.

Also, compare banks for specific features that you’re interested in. For instance, if you regularly deposit checks, confirm the bank offers mobile check deposits. Using this function, you can deposit a paper check into your account by simply taking a picture with your mobile device.

Earning interest on a checking account balance isn’t as common as earning interest on a savings account balance. However, some banks have chosen to offer interest-bearing checking accounts.

According to the Federal Deposit Insurance Corporation (FDIC), the average interest rate for an interest-bearing checking account is 0.06% at the time of publishing. The average rate for a savings account is 0.35%. High-yield checking accounts offer higher rates than regular checking accounts, but they may also have several requirements that you must adhere to, such as a minimum monthly direct deposit amount or a certain number of monthly withdrawals. If you don't meet all of the minimum requirements, you’ll likely earn little to no interest.

The FDIC and the National Credit Union Administration (NCUA) are federal agencies responsible for protecting the money you deposit into an insured bank or credit union, respectively. With FDIC and NCUA insurance, each depositor is insured up to $250,000 per insured financial institution per account ownership category if that institution fails.

If you deposit your money into a checking account that isn’t insured by the FDIC or NCUA, your money may not be protected if the account’s issuing institution fails. When a financial institution fails, it often has to close because it can no longer meet its obligations to its depositors.

Banks and credit unions should display signs in their branches to indicate that they’re insured by the FDIC or NCUA. You can also use the FDIC’s BankFind Suite to see if a bank is insured by the FDIC.

In general, a checking account helps you manage your daily finances. It typically comes with a debit card and checks that you can use to take out money from an ATM, buy groceries or pay bills. You can also find checking accounts that offer slightly different features to meet more specialized needs.

Here are the options you’ll have to choose from:

• Personal checking accounts: A personal checking account is for individual use. You get a debit card that you can use to make deposits, withdrawals and purchases. You can also write checks.
• Joint checking accounts: A joint checking account functions like a personal checking account, only there is more than one owner. Owning a joint checking account with a spouse or partner can make it easier to manage money and handle shared expenses. With a joint account, you share ownership. Each of you gets a debit card, checks and access to the money. You're both equally responsible for the account.
• Student checking accounts: Student accounts often provide benefits such as low or waived fees, lower minimum deposits and overdraft forgiveness to students from 17 to 25. To open a student account, you may need to provide your student ID or acceptance letter showing enrollment in a school program.
• Business checking accounts: If you run a business, a business checking account can make it easier to manage your business finances. Many business accounts offer special features, like payroll processing services and the ability to order employee debit cards.
• Interest checking accounts: An interest checking account pays interest based on your balance. In some cases, you may have to meet minimum balance requirements in order to get the highest interest rate. If your balance goes below the minimum, you’ll likely either stop earning interest or earn a substantially lower rate. Most people don’t hold a large balance in a checking account, since it’s for daily transactions. If you have a large balance, you can typically earn more interest using a regular or high-yield savings account.
• Premium checking accounts: A premium account can offer several perks for meeting high account balance requirements or having multiple accounts at the same bank. Perks can include a higher interest rate, free checks or ATM fee reimbursement.

Some checking accounts might offer rewards like high interest or cash back. You might also have the opportunity to earn cash through referral bonuses.

Other banks might offer promotional welcome bonuses to incentivize you to open a checking account.

While some banks offer a significant amount of money to get you to sign up, don’t let this trump other important factors when you’re comparing different checking accounts.

Finally, look at what other people say about the financial institutions you’re interested in. Take some time to read through customer reviews and see if any common themes come to the surface.

What do people say about the bank's customer service? Does the bank seem easy to deal with? Are people generally happy? Or are there a few major issues that keep coming up?