Is Your Checking Account Saving You $$$$ or Costing You?

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September 2004

All checking accounts are not created equal. Depending on your personal financial needs and habits, selecting the right checking account can save you up to several hundred dollars annually. Select the wrong account, and even a “free” account can cost you big bucks. The following questions can help you take a look at your current bank or credit union checking account.

Is the “free” checking really free? Some financial institutions promote “free” checking accounts that may have no “monthly service charge” but milk a customer’s account for lots of per-service fees every time you use a service. Such fees include ATM fees (including balance inquiry fees), bounced check fees, per-check fees (over a limited “free” number), check card fees, phone transaction fees, online banking fees, etc. In contrast, a checking account that has a small monthly service charge but then does not charge separately for a range of useful services can be a much better deal. CCU’s Value Account offers checking with no minimum balance and no monthly fees.

How high is the minimum balance required to earn interest and/or avoid a monthly service charge?Many checking accounts don’t charge a monthly service fee if you maintain a minimum average balance in the account; many of these also pay interest or dividend earnings if the minimum balance is maintained. In Bankrate.com’s survey, the national average balance required for interest-bearing accounts was $2,257.82, and a number of accounts require $5,000 balance. Nationally non-interest bearing accounts require an average $245.37 balance to avoid fees. CCU’s Advantage Account requires a $4000 minimum balance, but CCU’s Value Account has no monthly fees or required minimum balances.

What are the ATM fees for the account? Most checking accounts charge surcharges for using ATMs that are not branded with the financial institution’s logo. These surcharges range from $0.50 to $2.00, with $1.50 most common. The institution whose machine you use also tacks on a charge. Consider how and where you use ATMs and then look at the checking account ATM fees before you chose a checking account. With CCU’s Value Account, a member gets unlimited free ATM transactions at all CCU ATMs and 4 free withdrawals per month at non-CCU machines. At non-CCU machines, balance inquiries, transfers and additional withdrawals (beyond the four free) are $1 each. With CCU’s Advantage Account, a member gets unlimited free ATM transactions at all ATMs. These links provide a list of CCU ATMs and a list of surcharge free ATMs.

How does the account handle “bounced checks"? These fees, which range up to $35 and average $25.80 according to Bankrate.com’s survey, are a real money maker for many financial institutions. Some institutions also add a daily fee until the account is brought into balance. Your best choice is to set up standard overdraft protection. CCU offers several overdraft protection options.

How high is the minimum deposit to open a checking account? Maybe some advertised checking account offer looks interesting, but before you leap ask what’s the minimum required to open an account. Nationally, the required minimum to open an interest-bearing account is just under $500, to open a non-interest account requires about $60. There isn’t a minimum required to open a CCU Value Account.

Picking the right checking account can provide not only the services you need, but also save you money. So always take time to compare all the costs of any offer.

Prepared for Corning Credit Union by Remar Sutton & Associates, September 2004. Reviewed and updated March 2007. All rights reserved.