How to Pick a Checking Account

How to Pick a Checking Account | brokeGIRLrich

If you’re just getting started with your finances, you may be looking to set up a checking account for the first time.

Or you may have a checking account that you’re not very impressed with and looking for some options.

I thought I’d spend a few minutes today writing about how I chose the checking accounts I use, what I like about them and what I look for.

Many moons ago, I signed up for my first savings account while in high school. We went to my mom’s bank and opened an account there so I would have somewhere to deposit those massive paychecks I was earning as a cashier at Walgreens.

Usually, if you open a savings account as a minor, it’s a custodial account with at least one guardian on it, and the usually don’t charge you any fees.

A thing to be aware of here is that after you turn 18, there might be fees if you don’t meet the same requirements (minimum balances, transactions per month, etc.) as the bank’s basic account.

Then I went to my college orientation and the local bank had a little booth there and that’s how I opened my first checking account.

As you can imagine, zero research went into this. My parents and I just walked past the booth and realized I should probably have one and bam. First Union Bank became my bank.

Then Wachovia bought out First Union. And then eventually Wells Fargo bought out Wachovia.

And I had a basic Wells Fargo checking account for years.

During all this time, I never really asked any questions or did any research. I just bopped along with that checking account.

Until Wells Fargo pissed me off (and if you read my blog a lot, you’ll notice that companies pissing me off is a major catalyst for me to make big changes and educate myself about things).

I moved to a foreign country for a year and Wells Fargo was an unmitigated nightmare to work with while I was over there. I was hit with pretty large fees left and right and limitations on how much I could transfer at a time (probably so they could hit me with those fees each time).

Anyway, the day after I moved back to the U.S. from England, I closed my Wells Fargo account. Their track record as decent humans isn’t so hot anyway. A quick Google will take you to countless articles about their company-wide shadiness.

But before I could close that account, I had to do some research on a new bank and that was when I started to learn a little more about checking accounts.

The key things to look for are:

Minimum Balances
Monthly Fees
Number of Required Transactions
Number of Allowed Transactions
ATM Access
Mobile App
Overdraft Fees

Minimum Balance

Some banks require you to keep a minimum balance in your checking account. There are plenty of banks that don’t require this, so if yours does, you can find one that doesn’t.

That being said, I currently have three checking accounts. I’ve been using Ally since I ditched Wells Fargo. There is no minimum balance there.

I opened a TD Bank account a few years ago when I realized I wanted a brick and mortar bank for things like cashiers checks and (especially because of touring) changing foreign currency at favorable rates.

TD Bank has actually been fairly awesome and have had phenomenal customer service as I’ve wandered the globe. I do have to keep a $100 minimum balance though to avoid fees. For me, the other services they provide make that worth it. I get hit with a $35 a month fee if I forget and the balance goes below $100.

Recently I opened a checking account with a credit union where I plan on applying for a mortgage down the road. They require a $350 minimum balance, which I think is pretty high, but until I’m sorted on the mortgage front, I’m willing to do that.

Monthly Fees

Many bank can have a $5 or $10 a month maintenance fee, which is most likely not worth paying. As I mentioned above, there are plenty of banks that don’t have fees, and many that waive fees in lieu of keeping a minimum balance in the account.

Make sure you can confirm there are no monthly or maintenance fees on the checking account you open.

Number of Required Transactions

Another way some banks waive maintenance fees is by requiring a certain number of transactions a month. Some banks also waive minimum balance requirements if you meet a certain number of transactions a month.

If that seems doable to you, go for it. You can often hit those minimum transactions by connecting that bank account to things like paying your rent and utilities. However, there are plenty of banks that don’t this requirement, so if you don’t want the hassle, there are other places to look for checking accounts.

If there is a minimum number of transactions required, make sure you know the consequences for if you don’t meet the requirement.

Number of Allowed Transactions

Another thing to confirm is that there are no limits to the number of transactions you can make (this is pretty rare these days).

However, a place you may find limitations is in the number of transfers allowed in or out of the account monthly, so confirm it’s unlimited or be sure that you can work within that number.

Additionally, some internet banks have limitations to how many ATM withdraws you can make. I know when I started with Ally, you could make 4 withdrawals a month and be reimbursed for the ATM fees. Now they reimburse $10 per statement cycle and you can use Allpoint ATMS for no fee.

ATM Access

If you often use cash and are a regular at the ATM, you may want to make sure the bank you’re selecting has good coverage.

A lot of banks are very heavy in one region, but if you travel a lot, you may want to select a bank that has many options nationally.

Additionally, if you travel internationally, you may want to look into banks like HSBC and Barclays that have many international options too, and can possibly help you cut down on fees.

Many banks are also a part of the Allpoint network, which allow you fee free usage. These ATMs are all over the United States.

Mobile App

While this may not be a dealbreaker, a good mobile app can make some things easier. The ability to deposit checks from home, make transfers, and pay bills on the go is very useful to some. If these are things you do a lot with your current bank, make sure any bank you switch to has the same capabilities.

Fortunately, these days most do. I would be most concerned if I were switching to a credit union.

Overdraft Fees

Because it happens to almost all of us eventually, it’s useful to know what the overdraft fee is. Some banks also have a setup where if you have a savings account with them, they will use the money in your savings account to cover any overdrafts.

At the same time, I would ask about any other fees the bank might impose, including cancelled checks, returned deposits, and foreign transactions. That last one is really important if you travel a lot.

All that being said, my two tops picks are still: