Choose the Best Checking Account

The most basic and essential financial account everyone should have is a checking account. Unfortunately, according to the Federal Reserve’s most recent Survey of Consumer Finances, approximately 10 million U.S. households do not have a checking account at a bank or credit union. Ideally, everyone over 18-years-old should have a checking account in order to pay bills, track cash flow, and establish a track record with a reputable financial institution. We emphasize selecting an account with no monthly fees and accessible, no-fee ATM machines.

Should You Stay Local or Go Online?

Local Bank
This is the traditional national/regional “brick and mortar” banking institution with a branch on every corner of your community. As stated before, if you are going the local route, be sure to open an account with no fees (minimum balance, online bill pay, check-writing, etc.) and also ask about a sign up bonus. You can usually score a quick $25 or $50 deposit from these multi-national players since competition is so fierce for your banking business.

Online Bank
The digital scene continues to invade traditional spaces, and more of our financial advising clients are going virtual for their checking needs. Online checking accounts are more popular than ever due to their convenient, no-fee structure. Our three favorite online banks are:

1. Schwab Bank
2. Fidelity
3. E*Trade Bank

Many of you probably noticed that all three of these banks wear names traditionally associated with investment brokerage accounts. Points for you! And if you take a look at each link, then you will also note that all three of these online banks will give you free personal checks, free online bill pay, and even refund all ATM fees…even those pesky fees charged by out-of-network ATMs!

Consumers Have High Interest
A major reason why the general public is flocking online is the lofty interest rates that online banks are dolling out to customers. All three of the online banks listed above offer an annual percentage yield (APY) of at least 3.5% (Note: E*Trade bank requires at least $5,000 in deposits to earn the high interest rate; Schwab and Fidelity do not.). This is compared to the national “brick and mortar” average of about 0.35%. And rest assured, as long as the FDIC protects your online deposits, you will take on no additional risk by leaving your local branch and going online.

On the downside, online banks likely do not have a major presence in your neighborhood, so local offices could potentially be hard to come by. In this case, if you do visit your bank’s local branches often, then an online account may not be your best bet. But come on, who actually goes inside of banks anymore?

Five Checking Account Tips

1. Never pay an ATM fee again
   • If you can’t find a network ATM, just make a small purchase at any grocery store, pharmacy, or post office and ask for cash back
2. Use online bill pay whenever possible
   • Most banks even allow you to use bill pay to send money to friends and family at no cost.
3. Avoid mailing personal checks to pay bills
   • For personal security and identity-theft protection
4. Never have the following information printed onto your checks:
   • Driver’s License #
   • Social Security #
   • Full Name (Optional)
   • • Just use your first initial and last name
5. Check your account often
   • The best way to minimize the effects of identity theft is to catch it early
     • Watch your balances and report any suspicious activity to your bank immediately