Checking
Course Section
- Overview
- Online Banking
- Check 21
- Low Fees
Opening a checking account is often one of the first steps people take into the world of money—and it should be. A checking account is very important in managing your daily finances.
Your checking account is your cash flow control center. By paying attention to how money flows in and out of your checking account, you can see the income and spending patterns you create in order to live your life. And that gives you the ability to be more in control of your finances—and your life.
Convenience
Can the banking institution make your life easier? Here's what to consider:
- Hours, locations, and numbers of branches and ATMs
- Ability to get an ATM and debit card
- Options such as online banking, direct deposit and phone transfers
Some checking account features can save you time and energy. Usually, the advances are driven by technology. Consider:
- What can you do at an ATM?
- How easy is it to bank online or by phone?
- How quickly do your checks and deposits clear?
- What services are available to keep you from bouncing checks?
- What other services does the bank offer that might make life easier?
Branches and ATMs (Automated Teller Machines)
Consider how close a branch is to your home or work. Ask about numbers and
locations of ATMs. What hours do the local branches keep and what services do
they offer?
If you plan to use ATMs a lot, be sure to check out the fees. Is there a limit to the number of transactions per month? Usually you will pay fees for using ATMs owned by other banking institutions—one from the owner of the ATM and the other from your banking institution (some financial institutions are now waiving these fees). Try to avoid using these other ATMs frequently, since it could result in a lot of extra fees just to get cash when you need it. If you're considering a credit union or brokerage firm, be sure to check the fees since they generally own few ATMs and have few actual branches.
Even if you usually don't go into a branch, sometimes you may get better results by meeting face-to-face with a banking officer, especially when something goes wrong. And sometimes you will need to do business with a live person—for example, if you want to get a roll of quarters or travelers checks.
ATM Cards and Debit Cards
Unlike credit cards, both ATM and debit cards (sometimes called "check
cards") immediately withdraw money from your account when you make a
transaction. They don't allow you to borrow money. ATM and debit cards,
however, are not the same things. An ATM card allows you to conduct banking
transactions at an ATM machine. Debit cards are used to make purchases at
stores, restaurants, online, and most places that accept credit cards. Many ATM
cards now double as debit cards (if so, it will have a Visa or MasterCard logo
on it). Debit cards add another level of convenience: Many stores allow you to
get cash on top of your purchase, which saves trips to an ATM.
Caution- Legal responsibility issues for debit cards:
- If you notify your banking institution within two days of learning your debit card is missing, you maximum liability is $50. If you wait longer, you could be liable for up to $500. And if you wait longer than 60 days, you can be liable for all the money in your checking account plus any overdraft protection.
- The federal Fair Credit Billing Act says that credit card purchases give you the right to withhold payment if you're not satisfied with an item. The Act doesn't apply to debit card purchases.
- Many stores treat debit card purchases the same as cash or checks. As a result, you may only have the right to a store refund if you made a purchase with a credit card.
Avoid the debit card fee.
Some banks charge a fee every time you use the free debit card to buy something. Be sure to check your statement or ask a banking officer. To
avoid the fee and use the debit card, when a cashier asks "debit or
credit?" respond with "credit." There's no fee and no
downside. It won't really be a loan like a regular credit card—even
if you tell the cashier to run the card through as a credit card. But check
your monthly statement anyway to see whether a fee has been added.
What can you do at an ATM (Automated Teller Machine)?
ATMs can handle a lot of your banking needs. You can use an ATM to:
- deposit and withdraw money
- review account balances (and recent activity, at some ATMs)
- transfer money between linked accounts
- buy stamps (at some ATMs)
Safety
Is your money stored in a safe place? Not all banking institutions offer the same level of safety. Banks are a safe place to put your money. At a bank, your money is protected by a federal agency called the Federal Deposit Insurance Corporation (FDIC). If the bank goes bankrupt, the federal government will be sure you receive all of your money, up to $100,000, in the accounts at that bank. Check for the letters FDIC on the door of the bank, in advertisements, and on web site home pages.
There is no FDIC insurance for checking and savings accounts at credit unions and brokerage firms. But there is private insurance from the Securities Investor Protection Corporation (SIPC) for securities firms, and the National Credit Union Share Insurance Fund (NCUIF) for credit unions. Most experts consider the private insurance to be adequate, but not quite as safe as FDIC insurance.
Do you carry around too much cash?
Being able to pay by check or an ATM (Automated Teller Machine) card allows you
to avoid carrying around—or hiding at home—lots of cash. After all,
your personal and financial safety are very important. Try to use a financial
institution with many ATMs. If your employer offers direct deposit of your
paycheck, you can have it automatically deposited into your account—a
plus for both safety and convenience. You can also have your Social Security
check automatically deposited into your account.
