7 questions to ask before choosing a checking account

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Opening a new checking account might not seem all that complicated. You just go to a bank’s website or walk into a nearby bank branch, fill out an application, provide some deposit money and you’re all set, right?

Not quite.

While it is often that easy to open an account, it’s not always that easy to choose a checking account. That’s because banks, credit unions and other financial companies offer a wide range of checking accounts with different features and fees. Unless your banking needs are unusually basic, you should do some research and shop around for an account that’s right for you.

These seven questions will help you assess your checking needs before opening an account.

1. Do I keep at least $2,500 in my account?

If you have several thousand dollars or more in your checking account, a high-yield checking account might be appropriate for you. These accounts come with low or no monthly maintenance fees as long as you maintain your balance, and you’ll earn interest, which can help you build your reserves over time.

If your checking account balance is modest, look for an account that’s:

  • Free.
  • Has a low monthly maintenance fee.
  • Offers other ways you can avoid fees.

Alternatively, you might want to redeploy your savings to your checking account to raise your balance and take out a high-yield account.

2. Do I use a debit card or direct deposit?

A rewards checking account that offers an interest rate bonus if you use certain banking services on a regular and frequent basis might be right for you. The higher rate is applied to your balance up to a cap as low as $500 or as high as $25,000, giving you a small bonus from your bank every month.

Using a debit card, direct deposit and other services might qualify you for a rewards checking account with a monthly interest rate bonus. But if you don’t need those services, steer clear of rewards accounts and look for a standard checking account that’s free or has a low monthly account maintenance fee. Then you could earn extra interest by opening a high-yield CD.

3. Do I use overdraft protection or out-of-network ATMs?

If your checking account statement is packed with fees for overdrafts, foreign ATM use or other banking services, it’s especially important for you to shop around for a checking account that offers lower or discounted fees, or is a free checking account. Those are hard to find, but they are still available. Bankrate’s 2018 checking survey found 41 percent of non-interest checking accounts are free, with no monthly maintenance or other requirements.

Even scoring a slightly lower fee for just one checking account service you use often might save you a lot of money and help you stay on budget.

4. Do I want a smartphone app to manage my account?

If you frequently use apps for your smartphone or other mobile device, check out the online app store for your particular device and search for apps offered by banks and credit unions in your area.

Also, you should read customers’ reviews of those apps.

Choose an app that’s free, meets your needs and isn’t plagued by technical difficulties.

If mobile apps don’t appeal to you, consider your other priorities, such as low bank fees or a higher interest rate if it’s a rewards account.

5. Am I a teenager or parent of a teenager?

If you’re a teen, or a teen’s parent, you might want to look for a starter checking account. Many banks and credit unions offer them for teens, and they carry lower fees. These accounts can be a good option, though it’s still smart to shop around and compare what different banks and credit unions offer.

Once the checking account is open, teens need to keep track of their balances because not all transactions will post immediately to the account. Writing a check, making a debit purchase or withdrawing cash in excess of the balance can result in big fees, especially if the teen agrees to let the bank cover any overdrafts.

6. Has my bank closed my checking account previously?

If you’ve been blacklisted by ChexSystems, a service that tracks people whose checking accounts were involuntarily closed, a so-called “second-chance account” might make sense for you. Second-chance accounts can help you access the banking system, though you’ll probably have to pay higher-than-normal fees or maintain a minimum balance.

Second-chance checking accounts can be vital lifelines for rebuilding savings in a high-yield account or signing up for free online bill pay. Many banks and credit unions even bump you up to a regular checking account after one year of good behavior.

Still, consumers can get socked with high monthly fees and strict requirements, such as direct deposit or high minimum balances. Alternatively, consider using a prepaid card instead of a checking account.

7. Do I need to monitor my spending?

If you need to control your spending or manage someone else’s, such as a college student’s or an elderly parent’s, you might want to use a prepaid card instead of a checking account. A prepaid card is preloaded with money and can be reloaded when that amount has been spent.

Some people like the convenience of a prepaid card, but many prepaid cards come with fees that can make that convenience costly. Unless you need to control or monitor someone’s spending, a standard checking account that’s free or has a low or waived monthly fee is probably a better bet.