A checking account is a bank account that provides easy access to your cash. This is what is also sometimes called a “current account,” or “transaction account.” As the main account you’ll be using on a day-to-day basis, it’s important that you choose the best one. This will not only impact your finances by helping you to grow your liquid assets, but will also ensure that managing your money is kept as convenient, smooth, and hassle-free as possible.
You may have been bombarded with many bank ads and it is hard to figure out which one is best for you. Let’s explore the factors should you consider when choosing the right account.
What to Look for When Choosing a Checking Account
When it comes to choosing a checking account, there are several key factors to look for. Let’s consider each of them and break them all down.
Interest rates refer to the amount of growth your assets will enjoy while they’re sitting in your checking account. The key thing to recognize here, is that checking accounts typically don’t offer particularly high interest rates. If you’re hoping to grow your pot then, a checking account is really not the right place to put it!
But with that said, some accounts will still offer higher rates than others, and it’s certainly worth comparing these in order to get the best deal possible. Every little helps, as they say!
The fees you incur on your checking accounts are also important to keep in mind. Depending on the nature of the account, you might face fees for bounced checks, for going past your overdraft limit, or even for neglecting to use your account enough. In the latter scenario, banks will sometimes charge customers if they fail to regularly pay into the account, or charge bills to the account.
This shouldn’t be a problem for a lot of users, seeing as they should be using these accounts for their day-to-day expenses. But while that’s true, it’s also true that this is a condition that you don’t have to accept: it isn’t the case on all accounts. There is always the chance that at some future point, you will decide to treat your checking account like a savings account, or to open up a secondary checking account. In either scenario, you shouldn’t need to worry that you’re going to start losing money as a result!
Bonuses and Offers
Many banks will want to incentivize you to open up an account and as such, will offer a range of free offers to sweeten the deal. These can include anything from games consoles and mobile phones, to travel or health insurance.
While the idea of a mobile phone might be very appealing, something like travel insurance can actually offer a much better deal in the long-term and could even bail you out of a very expensive bill!
An overdraft is essentially a loan that is attached to your checking account. This means that you can withdraw a certain amount of money past zero, without incurring a penalty. That “loan” typically has extremely low interest, and acts as a safety net in case you are hit with an unexpected bill, or in case you need a few days’ grace until your next pay day. This is certainly much safer than a pay day loan, and it’s a great feature to have in place as long as you are sensible and don’t abuse it1.
Another thing to consider – and something that many people won’t take into account when choosing their checking account – is the quality of the service they will be getting from the bank in question.
Keep in mind that you’ll be using this account every day, and that you will be relying on the lender to help you out if ever you get into trouble.
Consider a scenario where your card is mistakenly reported stolen and is therefore frozen. How easily can you get in touch with customer service? How long does it take to get through to someone on the phone, and how quickly is the problem resolved? This might be an even bigger issue if you want to get a fee removed, or if you suspect that you may have been a victim of fraud.
Likewise, you should look at additional services and extras that your bank provides. Particularly useful are online banking services. How comprehensive is the app? Is it easy to log in and see all your transactions? Can you manage other products like your home loan or insurance?
In short, you need to consider the reputation of the bank, as well as the specifics of the account itself.
With all that in mind, there are many different aspects of a checking account to consider when choosing the best option for you. Be sure to shop around, but remember that this is not going to be your main option for growing your assets!