The Most Important Things to Consider When Opening a New Checking Account

Some banks will allow customers to open checking accounts without making an initial deposit, though since monthly fees (see below) are almost always assessed, it will be necessary to put money into the account early on. Other banks require a minimum deposit, typically ranging from $25 to $100, though some can be considerably higher (at least $500 in some cases).

Most banks levy a monthly service charge on checking accounts, though there are ways to avoid this. In some cases, maintaining a certain average daily or monthly balance, which might be as little as $100 or as much as $75,000, will cancel fees. The higher required amounts generally combine all accounts the customer may have with the bank, including savings accounts, home loans, home equity lines of credit, etc. Other ways of avoiding the service charge include receiving direct deposits, linking other accounts to the checking accounts, or making minimum purchases with the associated debit card. Some banks will also waive the fee for those aged 62 or older.

An overdraft occurs when the amount of a check or debit card transaction exceeds the available account balance. Often the bank will honor the check or charge, especially if overdrafts aren’t chronic, but it can also return a check unpaid or decline approval of a transaction. Bank policies regarding overdrafts vary widely, but overdrawing an account usually incurs a fee. Some institutions offer free transfers from linked savings or credit card accounts (that is, if a checking account is overdrawn, funds to cover the shortfall are automatically moved from another account). Other banks offer similar programs, but levy a fee for each transfer, usually $10 or $12. For accounts not covered by such an arrangement, banks typically charge a $35 penalty (or more) per item, though sometimes as little as $20 or $25. If more than one transaction exceeds the available balance, a fee will usually be charged for each one, up to as many as six or seven times in a 24-hour period, putting the account further in arrears.

When a check is deposited into a checking account, the funds are not immediately available to the account holder. Typically, it will take about 48 hours for the bank to release the funds, though it may take longer for larger amounts. Some banks, however, will make a portion of a deposit available immediately (say $150 of a $500 check). Regular customers at a bank branch and/or those depositing checks from large, well-known companies may be given access to the total amounts almost immediately.

ATMs are a great convenience, used by about 75% of American banking customers, according to the Federal Reserve. Banks put limits on the amount that can be taken out within a 24-hour period, however. This is generally at least $400, but may be as high as $2,500 — or even, in the case of one bank, $9,000. ATM users don’t pay a fee for using terminals belonging to their own bank. Using another bank’s (or a non-bank) ATM, however, will usually incur charges on both ends. A processing fee will be added to the withdrawal amount at the time of the transaction, and the customer’s own bank will probably assess an additional fee. A few banks do not charge these fees, but others may charge as much as $3 per transaction (and more for withdrawals outside the U.S.; see below).

Banks rarely offer their services for free. One cost that is hard to avoid is the charge for ordering new checks. A box of 100 or 125 personalized checks might cost $35 or more through the bank itself. (Checks may also be ordered from a third-party supplier, however, for considerably less.) In addition to monthly service fees and overdraft penalties, banks usually also charge for replacing a lost ATM card or providing a paper statement. Wire transfers both to and from an account incur a charge also (higher for outgoing than incoming), and there is typically a surcharge added to ATM withdrawals in foreign countries.

There are many better ways to invest money than by simply maintaining a large checking account balance, but some such accounts do pay interest The average APY, or annual percentage yield, is 0.01% to 0.02%, though a few banks offer rates as high as 0.05%, and the percentages can rise when larger minimum balances are maintained.

This is purely a matter of convenience. While it is entirely possible to perform most banking functions remotely (see below), having an in-network ATM near a residence or workplace can save both time and money. It is also a good idea to establish at least a nodding relationship with the staff at the branch that holds your account. This can mean better customer service, and possibly waived fees.

Most banks today offer online and mobile banking. This makes it easy to check balances and track debit card expenditures, transfer funds from one account to another, and inform banks of travel plans (to avoid problems with debit card use abroad), among other things. Some even offer mobile check deposit (using a phone’s camera to photograph the front and back of a check). Some smaller banks might not offer this accessibility, but it’s valuable to have.

Online banks don’t have physical branches (or have very few), which cuts their costs, and the savings are passed along to the customer. These operations offer many advantages, which might include (depending on the bank) no-fee withdrawals from large networks of ATMs, no overdraft fees, no monthly fees or minimum balances, and/or high interest rates on balances. Some can supply paper checks when needed, but many concentrate on direct electronic payments.