Personal finance is a major issue in the United States. Did you know that nearly half of all Americans who took a 2019 survey would prefer to chat about death,
politics, or religion - all hot-button issues that are considered taboo to talk
about - with someone than personal finance?
Financial issues are also a leading cause of
divorce, with a 2010 Citibank survey reporting that financial
issues were the cause of nearly 60% of divorces?
The best way to learn about personal finance
is to ask questions. Here are 7 essential questions that everybody should ask before opening a checking account.
1. How Much Are Overdraft Fees?
An overdraft is what happens when you spend
more money than your checking account has. Very few checking accounts don't
penalize customers with overdraft fees, though these accounts will typically
require minimum account balances to be maintained, monthly usage fees to be
paid, and are picky when selecting customers.
Overdraft fees generally range from $25 to
$40. NerdWallet found that, as of Sept. 2019, the average American bank charged $35 for every transaction that overdrew customers' accounts. The same
study found credit unions charged $26, on average.
Always ask how much overdraft fees are before
opening a checking account.
2. Are Continuous Overdraft Fees Charged?
Continuous overdraft fees refer to charging
account holders whose accounts were overdrawn a fee for each day their accounts
were in the red. The above study found that 58% of survey respondents charge
these fees, also known as extended overdraft fees.
You generally don't want to do business with
banks that charge continuous overdraft fees.
3. Are There Monthly Usage Fees?
Many banks charge customers monthly fees
called usage fees.
A 2019 Bankrate survey asked banks that charged
monthly service fees how much their rates were. Responses were split between
accounts that bore interest and those that didn't.
As of 2019, the survey found the average
monthly usage fee for interest-bearing checking accounts to be $15.05, whereas
the average for their non-interest-bearing counterparts to be $5.61.
You may be able to find better service from
banks that offer checking accounts with monthly usage fees. However, if you aren't well into the
middle class and can afford to pay
such fees, you should find a bank that offers free checking accounts. Many of
these banks are just as competent, if not better, than those that charge money
for checking accounts.
4. Can I Opt-Out of Overdraft Protection?
Many banks offer overdraft protection. In
other words, you can elect for the bank to cover transactions that you don't
have money to pay for.
Such transactions result in overdraft fees.
Fortunately, some banks allow you to eschew the potential of being slapped with
an overdraft fee by opting out of their overdraft protection program.
5. How Much Does Use ATMs Cost?
In satisfying your quest to find what to look for in a checking account, you
should ask how much using ATMs costs.
Another 2019 survey shows that using ATMs
costs an average of #3.09 per transaction. Using out-of-network ATMs costs an
average of $4.72.
6. Is Mobile Banking an Option?
Although mobile banking is widely popular,
it's not included by all banks. Ask all banks you may want to open a checking
account at whether they offer mobile banking.
Mobile banking isn't important to everyone,
though if you spend a lot of time on your smartphone, this is an important factor for you.
7. Are You in the MoneyPass Network?
Some banks enter partnerships in which members
pay upfront institutional charges to satisfy all costs associated with
maintaining automated teller machines such as the MoneyPass network. This makes
all ATM transactions entirely free.
This isn't the only type of surcharge-free
network to help you save money when using ATMs, through banks that do offer this perk are definitely ones
you should consider doing business with.
