Keep your eye on the following:
Ask about Balance Requirements
What's the minimum balance you must maintain to avoid paying fees and to earn interest? Customers who don't regularly maintain high checking account balances can wind up paying hefty fees for the privilege of letting the bank hold their money. Weigh the Fees Against Freebies
Never mind the toasters. Which free or low-cost services are most important to you? If you use ATMs regularly, look for banks that allow free unlimited ATM use. Pay attention to charges for using ATMs at other banks. Does the bank you're considering impose a fee on top of the one the other bank charges? Does the bank offer low-cost overdraft protection? Does it charge its customers for traveler's checks? If the pamphlets don't answer these questions, jot them down so you can ask when you go to the bank. Look Out for Your Interest
Don't be too quickly seduced by banks paying higher interest rates on checking accounts. Compare the banks' methods of calculating interest. The fairest method is to pay compound interest on your daily balance. This means you earn interest-including the previously accumulated interest-every day. Watch banks that pay:
- Interest on your balance only after your deposit checks have cleared
- Interest on your lowest balance, so that if you have $3,000 in for twenty-nine days and withdraw all but $100 on the thirtieth day, you'd receive interest only on $100
- What appear to be generous interest rates, but on closer inspection turn out to be calculated in the bank's favor (for example, on your lowest balance). These “high” rates won't be as good a deal as a lower rate paid on your daily balance.
Watch for Service Charges
You could wind up losing money each month if you earn $1.70 in interest but pay $10 in ATM transactions and service charges. Don't Limit your Search
Since many transactions can be handled long-distance through ATMs and on-line banking, your choice of banks needn't be limited to those in your immediate area. If you aren't happy with the offerings of neighborhood banks, feel free to look farther afield. Forgo the Frills
Some banks offer lower-cost “no frills” checking accounts designed for customers who keep a low balance and don't write many checks. If you fit that profile, find a bank that offers this option. Usually, a no-frills account allows you to write a certain number of checks (ten to fifteen) for free, charging you by the item as you go above that number. Ask for Ways to Save Money
Will the bank reduce fees or service charges for checking accounts for customers who maintain a savings account, purchase a CD, or take out a loan with the bank? Ask if you can reduce your monthly service charge by opting not to receive your cancelled checks with your statement, or by banking exclusively on-line or with the ATM. Customer Service Counts
Higher interest rates are attractive, but the few extra dollars you earn on an account may not be as valuable in the long run if they come at the expense of friendly, personalized service when you need assistance. Visit in Person
Once you've narrowed your choice of banks, make an appointment with the new accounts clerk. This is your opportunity to gauge the bank's level of customer service and the helpfulness of its staff. To avoid unpleasant surprises, ask for a detailed list of charges you might have to pay with the account. If the person you're meeting with can't provide one, or gives vague or unclear information, move on.
