When was the last time you thought about the cost of your checking account, other than bounced check charges?
According to a recent Bankrate.com bank survey, while bounced check charges continue to increase and can cost you a small fortune, there are other fees and charges that can quickly siphon money out of your account with very little fanfare.
Do you know if your account is an interest bearing checking account, non-interest account, or (truly) free checking?
Not knowing can cost you money.
Interest Checking
Although interest rates charged for mortgages and other types of credit are rising at a fairly steady pace the average yield for an interest checking account has not (currently averaging 0.32 percent compared to the Federal Reserve’s Open Market Committee current short-term interest rate of 4.75 percent on which lending interest rates are based).
And while the minimum balance necessary to open and earn even the paltry interest offered is lower (just below $430), the average minimum balance amount necessary to avoid fees or charges for these accounts is nearly 6 times that amount (averaging $2465).
Unfortunately, if the balance dips below the minimum amount to avoid fees, banks on average are charging a $10.85 monthly service charge on interest checking accounts.
The question to ask here is “Am I paying more in fees for the account than I’m earning from the interest?”
Non-interest Checking
A non-interest checking account will not ‘earn’ you funds - yet the minimum balance to open these accounts is much lower as is the minimum balance required to avoid monthly service charges.
(Some accounts, however, charge a standard monthly service charge, but it is much lower than the fee charged on an interest account).
Question for yourself: “Is this account enabling me to conduct the type of transactions I need to complete at a reasonable price?”
Free Checking
On the other hand, by law, monthly service charges can not be charged on ‘free checking’ accounts.
However, if you overdraw the account, bounced check charges are fair game.
And while some banks do eliminate ATM surcharges for their account holders using their own ATMs, if the customer uses another bank’s ATM, both banks may ding your account for an ATM fee.
Reviewing your checking account and the boundaries the bank has set up for fees and charges can save you money.
The easiest way?
Review your monthly bank statement (good idea anyway) looking for additional fees or charges.
Regrettably, not reviewing your monthly bank statement to keep track of bank charges and balances is just asking for a bunch of new charges - those pesky insufficient funds fees.
